Flooding the market (cont.)

Brent Birch, the Web-design consultant, has already reviewed the Personalized Bottle Water site when he arrives at Sikes's office the next morning. Birch is tall and thin, with short hair and crisply ironed clothes. He starts off by explaining how Sikes can set up a label-design tool on the site, freeing him and his clients from the expensive tedium of faxing proofs back and forth for approval. Moreover, proper Web site design will boost Personalized Bottle Water's chances of landing on the vital first page of results when potential customers enter "custom bottled water" and similar terms in search engines.

Sikes should resist the temptation to load up his home page with fancy Flash animations. Albeit eye-catching, animation lacks the verbal content that search engines use to identify relevant sites. It's also distracting. "Anybody looking for private-label water online will want ordering instructions and information about the company," Birch says. "They don't need waterfalls and dancing bottles to help them understand the concept."

Because of Sikes's years in the label-brokering business, he can deliver cheaper and better labels than his competitors can. Birch urges him to emphasize that point. "You need to convey that kind of thing right away," he says. "All the differentiators have to be obvious on the first page."

Once past the home page, it's imperative to capture contact information from visitors. Don't try to lure customers onto the phone, Birch says. Most people browsing hate to get into a phone conversation with a salesman because it's hard to disengage quickly once they have what they want. Sikes mentions that he wants to post his prices prominently on the site, but Birch has a different idea.

"Make the viewers provide some information about themselves before they get prices," he suggests. "That way you can follow up later if they don't buy immediately." The Web site can be set up to notify a PBW employee when a visitor has lingered on the site for, say, a minute or more. "Maybe after a minute," Birch explains, "a page pops up and asks the person browsing if he'd like to have an online conversation with a company representative."

Bill Young arrives at PBW's blue sheet-metal warehouse and settles his large frame into a chair in Sikes's unadorned office. Young instantly pinpoints a strategic dilemma. Should Sikes compete on price or pursue high-margin niche markets? As Sikes outlines his plan to buy several hundred thousand dollars' worth of used filtration and bottling equipment to start bottling his own water, consultant Bill Young abruptly cuts in. "Why bottle your own water?" he asks. To cut the cost of each case by $2, Sikes explains, thus boosting margins.

Young gives Sikes a puzzled look. "What business are you really in?" he inquires pleasantly. "Labels? Custom bottled water? Commodity bottled water? When you talk about bottling your own water, my first thought is that you're trying to get into the commodity business, and I don't think you want to do that. Commodity manufacturing is all about high volume and low cost, which requires constant spending on technology and equipment. On the other hand you're pursuing low-volume, customized orders, like weddings. I think you should stick to high-margin custom work. That's not high tech. You can get by with bubble gum and baling wire."

Sikes buries his face in his hands. "In the label business it's so important to cut costs for customers," he moans. "I have a hard time thinking any other way." Young chuckles. Sikes is a salesman at heart, Young says. Like all salespeople, Sikes concentrates excessively on price cutting and revenues but not enough on earnings. After all, Sikes's water has considerable snob appeal. "You're not selling water," Young says. "You're selling a vehicle for self-promotion. Sometimes it takes a leap of faith to believe you can get that extra price."

Sikes already advertises in local bridal magazines and at wedding shows in Arkansas. The consultant's eyebrows shoot up when he learns that newlyweds gladly pay Sikes a whopping $52 per case of personalized water. He urges Sikes to focus laserlike on the wedding market. "You can make $30 to $40 a case on wedding water," Young crows. "So why are you so worried about cutting $2 off your costs?" When Sikes argues that few brides become repeat customers, Young replies that brides aren't really his customers. "It's the wedding planners," he confides brightly. "After you've done a few weddings they'll be calling you."

A few days later Sikes says his head is swimming with good ideas for his business. He confesses he still wants to bottle his own water, despite Bill Young's skepticism. But he plans to defer his manufacturing dreams and concentrate on improving his online marketing.

Once the retooled Web site is up and running he plans to move aggressively into the wedding market. We'll keep an eye on Mark Sikes and report back on how he's doing. You can keep track too. When the bill for your daughter's wedding arrives and you see $2,000 of bottled water buried in the tab, you'll know that Mark Sikes is thriving.

Should Sikes start bottling or stick to his outsourced model? Please e-mail your thoughts to FSB's Makeover editor at fsb_mail@timeinc.com.

Could your business use a makeover? In general, successful Makeover candidates are profitable small companies with at least $1 million in annual gross revenues. To submit your firm for consideration, e-mail the FSB makeover editor. Please describe your business briefly, provide your most recent and projected revenues, and explain why you think your company would benefit from a Makeover.

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A tiny telecom startup calls for help

Carving out profits 

12