Cutting the Grass

Cutting the Grass

A few minutes ago the doorbell sounded and upon answering it I discovered our friendly lawn mower man smiling back at me. In my opinion his dark sun tanned wrinkled face had seen altogether too much of the Australian sun but that was his job and he loved it.

During the few minutes of idle banter I remembered that we had a now thoroughly dead Christmas tree down the side of the house that needed removal. I asked him if he’d take it away and he quickly replied, “Not a problem but there is a disposal fee of $10.”

I know that the local council will charge something but it’s nothing like $10. Despite this I quickly replied, “Not a problem!”

So why did I do it? The value in not having my wife Roselyn ask me to remove the tree was worth more to me than the $10. For that matter he probably could have asked for $15-$20 and I would have agreed! My problem would have been at that price Roselyn would have made me do the tip run the following year with the pine needles from the dead tree filling up my sports car. She pays the bills in our family and there’s nothing getting past her.

From our mower man’s perspective he normally gets $35 per cut so he’s just dramatically increased his take from his client. It works out really well for him, for me and that’s what business is all about.

I speak to a lot of people about business and it surprises me that time and time again many of them think that it’s all about trying to get the most out of the other guy. That’s a transactional mentality. At some stage the person on the other end of the transaction will get smarter, feel ripped off and go elsewhere.

I personally think that it’s better to have a more long-term view with clients. This means that every transaction needs to be fair and work for all parties. I don’t just want a deal now I want to deal multiple deals into the future. With the result that we’ve had clients for seven plus years with ParkLogic and whenever there is an issue we have a relationship with them that’s stood the test of time…..I think that’s a much better way to go.

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Tracking the Data

Tracking the Data

So what does it mean to properly manage your domain assets? Some people believe that as long as you're earning PPC revenue, renewing domains and getting sales then all the bases are covered. These are important things to consider but let's unpack things a little.

Traffic revenue is money generated from the people that are going to your domains and clicking on advertising. There's a few things here that needs to be nailed down on a daily basis:

1. Aare the nameservers pointing correctly? These are often changed at renewal time by registrars.....especially if you are slightly past the renewal date.
2. Do you need to set cNames for routing traffic? cNames are used to route traffic to Google parking companies if you have a traffic routing system.
3. Are the domains in your parking account? Conflict resolution is a huge issue for parking companies and domains can often be inadvertently removed from your account if someone else believes that the domain is owned by them.
4. Keywords - are they the best ones and do they need to be updated?
5. Are there any other optimisation levers that you can use to extract more value from the traffic?
6. Is there are way to aggregate your traffic with others to get a better deal?

So this is just a few of the things that you need to consider to manage your traffic domains.....now let's look at sales......

1. Have you responded to all the sales offers? Most offers are SPAM so you need to spend some time wade your way through the good and the bad.
2. You've had a successful sale, now there is the whole Escrow and transfer process. Sounds easy but you need to remember to do it.
3. How do you work out the sales price for you domains? Is there an automated system or should you use your experience?

I could go on and on with the sales list but here's the really big one and it's often the most ignored......asset management.

1. What did you buy the domain for?
2. What did you sell the domain for?
3. What is the inventory carry value for the domain?
4. What system are you using to appraise the acquisition of a portfolio of domains, individual or average cost pricing?
5. What is your capital gains tax position at any point in time?
6. How are the domains locked down and where are they?
7. Renewals and on what basis is a domain renewed?

This last category is just as big if now bigger than sales and traffic tracking and it can have an even bigger impact upon your earnings then the first two. If you don't get asset management right then you could end up in trouble with the IRS (tax authorities).....so don't ignore this one.

I can only speak about the fact that at ParkLogic we track over 250 different metrics every single day for our clients. It's a true domain asset management platform that also optimises the traffic and helps you increase sales. What I've learned over the last decade in this industry is that effectively managing your assets can provide huge dividends for your business.

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Where's the next dollar going to come from?

Where's the next dollar going to come from?

The first thing that I think about when I view my domains is not "where the next dollar will come from" but rather "Where the next dollar willl come from that sticks to my hands". In other words, show me the profit not just the revenue.

So let's take a look at the good old profit equation of revenue less expenses.

So where's the revenue going to come from in 2014 that will be past the dismal performance that many domainers experienced in 2013? Google will underpin much of the revenue as they have been doing for the last ten years of the industry but the real wins are going to come from direct advertisers and affiliates. We're seeing more and more traffic being won in our bidding system at ParkLogic by zero click solutions....which is always a good thing. If you don't have your domains in a program that has this to offer then give me a call as you're missing out on a bucket of revenue that's not dependent upon a single provider.

I'm not sure about you but I'm continuing to develop a number of websites.....just nudging them along bit by bit to get them to the point where they can then be a profit centre for me. If you aren't developing a website then once again you're potentially missing out on some good revenue.....but make sure that you develop something that you're interested in. I may have some great cosmetic domains but you know what? I have no interest in that industry other than when it relates to my wife and daughters.....then all husbands and dad's take an interest. :-)

Words of advice.......rainbows are pretty things but they are illusory. Likewise, if you plan on waiting for that ultimate huge sale then you may be waiting a LONG, LONG time. Price all your domains at what I would call fair rates and be prepared to sell them for those rates with NO seller's remorse. I work out my stock item domains from my high value you domains and I have a different strategy for each.....so get them into the marketplace and start selling. I'll have to do another blog on this concept.

On the expense side of your business most of them are locked in place. I'm sure that you can negotiate a better rate with your registrar but seriously, the margins for them with domainers are really slim. The biggest expense that is hidden is your time. The easiest thing in the world to do is keep a log of the amount of time that you spend on your domains (including checking stats) for a week and than multiply it by your hourly charge out rate to your business. That's a cost that you need to get down or technically your business may be unprofitable.....or you're earning $1 per hour.

Anyway.....I hope that this helps you out and provokes you into thinking about your domain business.

 

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