The power of the newsletter is often underestimated for many small business owners.  Regardless of your business type, the ability to effectively reach targeted customers who are willingly receiving information from you is invaluable. This form of targeted marketing is easy to implement and can provide you with many tools to increase interest, sales and revenue. If you have not yet established a newsletter for your business (whether it is a physical store, a personal brand or an online entity), you should seriously consider the advantages.

 

Newsletters are the backbone of your marketing campaigns.

Do you have a new product you are about to launch? Maybe you’re planning an event that you want to spread the word about?  Your newsletter will be your first source of marketing.  Your immediate target market will be the first recipients of this knowledge.  Not only will you be able to inform past customers (who you know maintain at least some level of interest in what you are doing as a business), they will be excited to hear this information from you first, it makes them feel privileged to hear it from the source first.  Before you head to your local newspaper, or start hanging flier around town, realize that the audience who will be seeing those adds are likely to have no interest in what you are selling. They are a crap shoot compared to your newsletter.

 

Use your newsletter to retain customers

Customer retention is a huge topic in small business.  You have to focus on keeping your customers around or else you cannot build on your current volume.  Customer retention is felt in three ways:

 

1) Profitability: 5-20% more expensive to find a new customer than to keep one.

2) Revenue: just 5% more retention can translate into 77% more revenue over 10 years.

3) New Business Development-reputation plus referrals equals growth!
*sba.gov

 

Your newsletter is a great way to remotely keep your customers informed and excited about your business.  Customer retention is huge, and your newsletter is a great tool to keep your current consumer base coming back.

 

Leverage your newsletter for advertising profits

Not only can you reach targeted customers with your newsletter, but so can your advertisers.  A great way to earn some extra revenue is to charge advertisers a fee to place a banner or a mention within your newsletter publications.  If you have enough subscribers, any marketing department would jump at an opportunity to reach them. Assume you own a wine shop and have 2,000 newsletters subscribers.  With your newsletter you inform your customers of new products, wine tastings, dinner events, etc. Approach some wineries or brands about advertising in the banner of your newsletter.  Maybe even offer to feature an item.  With enough recipients you can certainly grab the attention of related companies.

 

A quick word of caution before you stuff your newsletter full of ads though…  Make sure you keep your customers in mind when preparing your newsletter publication. Too many ads, or newsletters that steer away from their purpose will push customers away, and remember each customer is only one click away from unsubscribing. Keep your advertising humble, and if at all possible, allow your customer to benefit from the ad mentions in your newsletter.  Only promote products you believe will benefit your customers, or that your customers will enjoy learning more about.  Advertisers also enjoy having exclusive rights, regardless of the ad setting. Instead of overloading with advertisers, ask a higher price and offer the ability to be the only mention in your newsletter. Companies will be willing to pay more for being the only ad.

 

Get started!

Choose a newsletter provider: The two great powerhouses in the newsletter game are Aweber and Constant Contact.  I gave both a free trial to try and get a feel for them before I made my final decision.  Constant Contact provides a 60 day free trial so I went with them first.  My initial reaction was poor for a few reasons.  Stylizing your signup form was a difficult task with Constant Contact, and was very important to me,  as I have a website and need an attractive form in my banner.  Constant Contact did offer immediate support and I feel provided all necessary tools for running a newsletter if you were inputting the contacts yourself.  They offered many custom layouts and styles that looked attractive from the customers point of view.  On the flipside, Aweber did not offer a free trial, but I went ahead and paid the $1 initial investment to sign up. Aweber offered more attractive options for someone operating a newsletter online.  Better styling, great ease of use and a step by step guide to getting started.  They also contacted me to see if I had questions and that was a great personal touch.  I would suggest Aweber for an attractive looking, fully capable newsletter. If you are not interested in the Aweber service by the end of your trial, make sure you opt out or your membership will kick in and you will start paying for the newsletter capabilities monthly.

 

Start gathering contacts: After you have started your newsletter provider, begin gathering information from you customers.  Any time you can give them the opportunity to sign up, have a clip board out.  At the register, any events, on your website, the more the opportunities the better! Offer incentives to sign up and make sure your customers know what sort of information they will be receiving. Be sure to keep diligent notes on who you have added and keep your list up to date.

 

Stay consistent: Consistency is key with your newsletter. Whether you are sending out updates weekly or monthly, you should stick to your schedule.  If you should go dormant for a period of time, then start up again, your customers may not remember signing up and consider your email spam.  Consider sending a welcome message letting your customers know they have been added to the list and will be receiving emails in certain intervals.  That way they will expect your information and be less likely to opt out.  Even if you don’t have time to put together a great newsletter, try not to skip contacting your customers.  Even a general update of what’s going on with the business will be enough to keep your readers happy.

 

Don’t miss a beat! Here is the week in review.  Get this roundup and more delivered direct by signing up to our rss feed.

 

5/9 - Debt Payment Strategy

5/10 – Cheap Wine ≠ Bad Wine

5/11 – Student Loans Infographic

5/12 – The Greater Good Charity Spotlight – Love Drop

5/13 – 25 Free Trades From Scottrade

5/14 – Today’s My Birthday!

 

Other worthy reads from around the web:

The Great Education Hoax @ Everyday Bright

Some people think going to college will prepare them for life. Or at the very least, teach them how to succeed at work. Nothing could be further from the truth.

 

Expensive wine and cheap plonk taste the same to most people @ Guardian.co.uk

The real surprise is that the more expensive wines were double or three times the price of the cheaper ones. Normally when a product is that much more expensive, you would expect to be able to tell the difference,

 

11 Money Tips For College Students @ Saving With Me

1.) Use credit cards with extreme caution.  This has to be number one.  Credit cards are marketed so heavily to college students that it is inevitable that most college students will apply and get approved for one sooner or later.  Never in my life was credit so easily available and the temptation to spend so high.

 

Positive Penny (Life After Debt) @ Verve Coaching

One of the difficulties in navigating the transition from debt-laden to deb-free is that the money you’ve been allocating for paying off your debt now seemingly has no purpose.

 

60 Stock Tips For Investment Success @ Stock Trading To Go

7.) It only takes $500 to $1,000 to get started. Experience is a great teacher.

 

 

Today I will be celebrating the quarter century mark and taking the weekend off to skip town for some much needed adventure. Everyone take care and I’ll be back with more on Monday!

 

Plans for next year:

When I get back I’m going to crack down and get to work on some goals for the next year of my life. Of course, I’ve already stated some… But I’m going to put together a definite list of enabling, financial and personal goals for the next 365. This is something I do every year and can’t wait to get started on my next list.

 

Until then, Happy Weekend!

Tom

 

Please Note: This blog post is relevant as of 5/13/2011.  It has come to my attention that Scottrade has reverted back to its normal 3 free trade policy as of 5/27/2011.

I was on my Scottrade account last night and it looks like there is a new promotion going on to try and spur some interest in new sign ups.  Scottrade is now offering 25 free trades for anyone who signs up with a new account. This is definitely a great deal.  For those of you who are new to investing, or haven’t had a good chance to start putting money away into the market, this is a great incentive.  Scottrade is a company I have been using for many years is the only one I can personally advocate for.  This new offer is the best I have seen from the company and hope that you seriously consider taking advantage of it.

 

It’s been pretty obvious that Scottrade has been getting squeezed by new, up and coming online brokerage companies lately.  Companies like OptionsHouse, Zecco, TradeKing, TradeMonster, OptionsXPress, etc. that are cutting into Scottrade’s well known discount online brokerage market.  Looks like Scottrade is retaliating with some perks of its own. Remember Scottrade is a well known and established company, and this is a great opportunity to start trading for free.

 

In terms of real dollars, I will admit that this offer has me very excited. Since Scottrade offers online trades at $7 per trade, 25 free trades is essentially $175 free dollars.  I have outlined before how broker fees can limit your investments, and if you are just starting out in investing, paying those broker costs can chip away at your probably somewhat meager initial investment (Scottrade requires at least $500 to start).  To properly diversify a portfolio, it is suggested that you maintain at least 5 investments to adequately spread risk around, but $7 x 5 buy orders and 5 sell orders = $70 lost in broker commissions to complete your investment.  Thats means your initial investment of 500 is instantly chopped to $430 before you’ve really even had a chance to make some money.

 

Well, how do I cash in?

Ready to start trading and to cash in on this great referral deal?  My referral code is XCZP8550. Use it while you are signing up and we will BOTH receive 25 free transactions. Win Win! Use that code and head over to https://apply.scottrade.com/ to sign up.

 

Don’t forget, those of you who already have a Scottrade account, that doesn’t mean you’re missing out. Every new user you refer with your ReferALL code will score you 25 free trades as well.  This post will show you how to find your referral code, but then it’s up to you to get new users to sign up.  But again, it’s $175 per referral, so get going!

 

Scottrade Code for 25 3 Free Trades:

XCZP8550

 

Please Note: This blog post is relevant as of 5/13/2011.  It has come to my attention that Scottrade has reverted back to its normal 3 free trade policy as of 5/27/2011.

The first edition of The Greater Good is going to spotlight a program that I am very impressed by/envious of, mostly because it was founded and developed by a personal finance blogger. I believe heavily in charity and giving back to the community, but was very impressed by the program that J. Money over at BudgetsAreSexy along with co-founder Nate St. Pierre have put together.  They have done a great job to leverage their blogging outreach to spur action from their followers and are now making a difference in the lives of others.  Very Cool.

 

Love Drop

 

Love Drop is a micro-giving network of people who unite as a community to help one person or family per month. By subscribing to the team for as little as $1, Love Drop makes it easy for our members to change lives in a fun and tangible way. Each month Love Drop delivers a unique combination of unexpected financial gifts, personal encouragement and the support of local and online communities.

 

So far Love Drop has distributed $30,554 worth of financial support to individuals and families who were in need of financial relief.  The recipients of  Love Drop contributions are chosen based on financial need and circumstance.  (Read up on past contributions here). There are some incredible stories, and the money certainly goes to a great cause.

 

The beauty behind Love Drop is the personal relationship built between contributor and charity.  As a Love Drop contributor, you will have the ability to follow along as the lives of your charity are changed.  Love Drop provides constant updates via its blog, newsletter, and Flickr profile.

 

So Get Involved! Don’t be shy, drop some love!

 

 

 

 

There are also many ways to contribute.  You can send donations as a monthly subscription, a lump sum payment via Paypal (paypal@lovedrop.us), or by way of a gift. For you business owners out there, Love Drop is also accepting sponsorships. Remember, a little goes a long way.

 

Here is an incredibly interesting info-graphic I came across while doing some research on the history of student loans. Rather than attempt to outline these facts myself, take a look at some of the specifics of student loans.

by College Scholarships.org:

Student loans have a been a frequent topic on this blog simply because they are a personal struggle of mine, and I imagine for many others in this country. After experiencing the repercussions of taking out these loans without doing my homework, I fear the number of students who are themselves walking into a debt trap.  I also fear this number will increase substantially. Recently, Obama made statements setting an ambitious goal of the United States having the world’s highest proportion of college graduates in the world by 2020.  How are all of those college grads going to pay for those degrees, as undereducated and under-supported on the topic as they are? I want to be clear that I am a strong political individual, but that statement gave me chills.  I believe in all people’s right to education, but please, lets fix the issues before we compound them.

Wine is an amazingly interesting hobby and it is also one of my favorite money saving topics. All to often I encounter individuals who are unwilling to “lower their tastes” and scoff at lower priced wines, simply because they believe these wines must be undrinkable. In the eyes of  wine consumers, the price of the wine IMMEDIATELY indicates the quality. This is one of the few products that I am aware of where a higher price plays such a profound role on buyer behavior. But is this behavior just? I personally don’t believe so, and neither do researchers:

 

In the blind taste test, 578 people commented on a variety of red and white wines ranging from a £3.49 bottle of Claret to a £29.99 bottle of champagne. The researchers categorised inexpensive wines as costing £5 and less, while expensive bottles were £10 and more. The study found that people correctly distinguished between cheap and expensive white wines only 53% of the time, and only 47% of the time for red wines. The overall result suggests a 50:50 chance of identifying a wine as expensive or cheap based on taste alone – the same odds as flipping a coin.

Richard Wiseman, a psychologist at Hertfordshire University, conducted the survey at the Edinburgh International Science Festival.

“People just could not tell the difference between cheap and expensive wine,” he said. “When you know the answer, you fool yourself into thinking you would be able to tell the difference, but most people simply can’t.” – guardian.co.uk

 

In defense of the buyer, I will say that it is very difficult to judge a wine that you have never tasted before the purchase.  What do you really have to go on?  General brand information, the label and the price.  Thats really about it. So for the customer, assuming that a more expensive bottle is better may be one of the only indicators you have to go on.  But what if you walked into a wine store, and looked at two wines side by side that both cost $40.  What if I told you one of those wines actually retailed for $10.  Would you be able to identify the difference?

 

My advice? If you are frequent wine drinker, instead of assuming your highly refined palate won’t be able to satiate anything under $40, try 4 or 5 wines under $15 instead. You may be surprised.  Advances in winemaking, as well as a general surplus in the industry is driving prices down.  It may be time to open up to the idea that just because a bottle of wine is inexpensive, does not mean that you won’t enjoy it.

 

Suggestions:

 

• 14 California Whites Under $20
• Best Wines Under $20
• 90+ Rated Wines Under $20

 

How to find more value for your dollar:

 

Although most wine does age, it is still a perishable product.  Check out this vintage chart.  Look for the timeframe for when a specific varietal is reaching it’s peak. Wholesalers will not sell wine that has gone bad, but instead will sell good wines that are at or near their peak drinkability in large quantities for deep discounts.  Their fear is that if sales remain constant, they may still be holding an inventory of the item when it begins to turn south.  This is a great opportunity for the retailers, who will most likely buy these items in bulk and pass the savings onto the customer to move the product quickly.  Good news for the customer who now has the ability to buy quality wine at its peak for a deep discount. Remember, not all wine is destined to age well, so you should consume these wines within a moderate timeframe of their purchase.

 

The same goes for beer.  Seasonal beers are all the rage these days, but guess what happens when a certain season doesn’t sell very well (or when Sam Adam’s Summer Ale hits the shelves on April 1st, what?!).  Good news for you Sam Adam’s Noble Pils fans (their spring offering), because now the warehouses are stuffed with spring beer and everyone’s already drinking Sam’s Summer. Perfect example of this concept (See what I mean?).

 

Ask Questions!  Your wine salesman (or woman) will have a great amount of knowledge on where to find the best values. If you are in a state like Maine where the majority of alcohol is sold in suparmarkets and gas stations, seek out specialty stores.  The people working the counter are in most cases very handy in finding great deals on products and will provide far more useful information than a gas station attendant. They may even know which wines are marked at a deep discount.

 

Know what you like! Wine drinking is a personal experience and you should drink what you enjoy. Stop assuming that what you enjoy is what’s expensive. If you aren’t sure whether or not you like Torrentes, you should probably hold off from purchasing a $200 bottle, assuming it must be good. What’s the point if you don’t like Torrentes (and are unaware of this fact)? Take some time to explore some varietals and find what you really like so you can make better purchasing decisions.  The worst investment is one that you pour down the drain.

 

Remember, at the end of the day wine is still a sunk cost.  You consume it and it is gone (Unless you are holding wine as an investment). These types of purchases are toxic on the budget and should be made wisely.  For a healthy body and a healthy wallet, purchase wine in moderation. This is a finance blog after all.

As you may well know, I currently carry a large amount of personal debt. Because of this I can’t help but strategize a way to pay down my expenses most effectively. Throughout my lifetime I have learned to love the mantra that the key to paying down debt is targeting the highest interest rates first. This is a great concept that I hope you are aware of, but if not, listen up because this information is invaluable. Some of you may currently be implementing the ”snowball” payment strategy, which dictates that you should pay off the lowest balance first, then use the money that you would have put toward the eliminated debt toward other balances.  Advocates for this method argue that it is easier to understand, so people are more likely to use it and pay off debt rather than not at all. I call foul. Paying debt back based on interest rate is a simple concept that could save you a lot of money in the long run, especially if you have more debt that you can pay off by the end of the month.

 

So, why does paying off your higher interest rates first save you the most money? Fortunately, my debt is a perfect example:

 

Credit Card #1: $1,950 @ 9.24%

Credit Card #2: $1,500 @ 28.00%

Medical Bills: $479.22 @ 0.00%

Student Loan #1: $2,825 @5.00%

Student Loan #2: $14,204.41 @4.94%

Student Loan #3: $82,656.43 @5.31%

 

So whats my repayment strategy? Well, first I need to organize my debt based on interest rate, highest first:

 

Credit Card #2: $1,500 @ 28.00%

Credit Card #1: $1,950 @ 9.24%

Student Loan #3: $82,656.43 @5.31%

Student Loan #1: $2,825 @5.00%

Student Loan #2: $14,204.41 @4.94%

Medical Bills: $479.22 @ 0.00%

 

There is the basic outline of which debt obligations will fall into the crosshairs, from to last. Easy.  Right now, I will make minimum payments on everything except my high interest credit card.  Once that debt is eliminated I will move on to the next card, and continue accordingly.  The point here is that your money is always better served being put toward the highest interest rate.  $1000 put toward debt on the card with 28% APR would save me $23.33 in interest charges, whereas $1000 put toward the card with 9.24% APR would only save me $7.70. So if I have many different forms of debt that I am paying simultaneously, the strategy is to make minimum payments on every form of debt except the one with the highest interest rate. Now I will take the excess that would have gone to that debt, and allocate it to my debt with the highest interest rate.

 

For example, if you wanted to make payments on three credit cards of similar balance, your first intuition may be to spread your debt budget equally to each card (lets assume your debt budget is $1000. Let’s use the following three cards as an example:

 

Card 1 Balance: $1000 @ 5% APR (accrues $4.16 in interest per month)

Card 2 Balance: $1000 @ 12% APR (accrues $10 in interest per month)

Card 3 Balance: $1000 @ 30% APR (accrues $25 in interest per month)

 

If you divided your $1000 budget equally among each card, your interest charges would come out looking like this:

 

 

If you fight this urge, and utilize the strategy I outlined earlier, you will put all of your debt budget toward the credit card with the highest interest rate.  In our example that rate is  30%.  When you allocate all of your $1000 to this card, you will see that your interest charges are quite lower.  Here is how it would look:

 

** Please note: For the sake of example we will assume there are no necessary minimum payments, and that the balances stayed constant at $1000 for the entirety of the month prior to payment. Credit card interest accrual is a little tricky and there are many factors coming into play. Please be aware that I am simply attempting to illustrate how the interest will accrue. (if you are unsure how credit card interest works read up here).

 

Thats a savings of 54%! Woohoo! You may scoff at the idea of only saving $11.93 and stick to your old habits, but as this interest accrues month after month, this small adjustment in the way you tackle your debt can save you a lot over the long term. What you need to understand is that these charges will continue over a long period (for as long as you hold a balance). Remember that whatever interest charges you don’t eliminate now, will be added to your balance, and then even your interest charges will be charged interest. You will be charged interest next month for interest charges this month, so every penny counts when it comes to debt.

 

Don’t miss a beat! Here is the week in review.  Get this roundup and more delivered direct by signing up to our rss feed.

5/2 – April 2011 Financial Statements

5/3 – April 2011 Adsense Earnings Report

5/4 – Setting Up Your Niche Site Step #1 – Choosing A Hosting Provider

5/5 – How To Survive Between Jobs

5/6 – Diversify Your Income

5/7 – Mint.com – Free, Internet Based, Interactive Budgeting Software

5/8 – Age Based Retirement Investing

5/9 – Debt Payment Strategy

Did you know your age plays an integral role in how you should be investing your retirement savings?  As you move toward retirement age, it is advised to adjust your retirement portfolio toward more secure holdings and protect your nest egg against the risk of a large fall in the market. This theory is known as age based investing, and is catching on among investors and financial institutions alike.

 

The thought process behind age based investing is that a younger investor will have the ability to withstand a sudden drop in retirement savings due to risky investments or a market downturn early on in their lives, and recover from those losses in plenty of time to retire.  A 24 year old still has 41 years to recover from losses incurred from serious portfolio fluctuations, while an individual nearing retirement age will not have the same time frame to recover. On the other side, the last thing you want in the years before your retirement is for your nest egg to take a nose-dive and force you to continue working. Therefore, the closer you get to retirement, the less risk your portfolio should maintain.

 

What is meant by less risk? Well, in simple terms, financial instruments with less risk are those that have the least volatility and downside potential.  Cash or money market funds are the least risky investment, while speculative stocks are the most risky.  Of course you can also find a middle ground with mutual funds, bonds and stable stock selections.

 

A Rule of Thumb for Aged-Based Retirement Investing:

 

A generic rule of thumb I was taught was starting at age 20, for every 10 years of life, you should move about 20% of your portfolio away from speculative equity investments and toward stable financial instruments that hold less risk. Of course this guideline is entirely subjective, as some investors are more tolerant to risk than others. Some are also more prepared. A great way to gauge your risk is through mutual funds. With mutual funds you still have the ability to invest in different aspects of the market and keep control over your equity investments, but the funds will tell you right away how much risk exposure they maintain.  If you haven’t warmed up to morningstar.com yet, I would suggest taking some time to explore their website and the great tools they have to offer.  Morningstar does a great job of ranking mutual funds based on their purpose, performance and asset allocation. As you age, look for large-cap growth funds with a greater allocation toward bonds and cash, as these tend to be the most stable mutual fund investments.

 

Other Great Age Based Retirement Investing Tools:

A few years ago Vanguard released a series of funds known as Life-Cycle Funds.  These funds are a great example of how risk should be handled as you age. These funds gradually increase their asset allocation to bonds each year, providing more stability over time, and they actually provide you with a target retirement year, so you know they are adjusting their allocations in correlation with your age. These funds include global stocks, plus U.S. Treasury and high-quality corporate bonds. By holding an appropriate stock/bond mix, they can still offer potential growth but with the stability necessary for your retirement age.

 

Examples include:

 

• Vanguard® Target Retirement 2010 Fund (VTENX) – 47.5% Stocks, 41% Bonds, 11.5% Money Market
• Vanguard® Target Retirement 2020 Fund (VTWNX) – 67% Stocks, 33% Bonds
• Vanguard® Target Retirement 2030 Fund (VTHRX) - 81.5% Stocks, 18.5% Bonds
• Vanguard® Target Retirement 2040 Fund (VOFRX) – 90% Stocks, 10% Bonds
• Vanguard® Target Retirement 2050 Fund (VFIFX) - 90% Stocks, 10% Bonds

 

You should always consider your risk exposure when investing your retirement savings.  Retirement funds are the essence of long term investing, and you should treat it as a marathon, not a sprint. With so much going on in the market these days, now is a great time to take a look at your portfolios risk exposure in relation to when you plan to retire. Is your portfolio balanced with your age?