Solidarity: Monopoly Marketing of Several Decoration Companies
Mr. Han came to Shanghai in 2000. At first, he sold building materials for others in Jiuxing Comprehensive Market. With a flexible mind, he rented two storefronts in 2002, opened his own building materials store mainly selling light steel keels, and hired 7 salesmen to tout for business everywhere. One year later, the business wasn’t very good. By chance, in 2003, he heard that he could do promotion on Baidu to receive more business. Thinking about giving it a try, he paid RMB 3,500 yuan in advance for advertising. Few people were advertising building materials on Baidu at that time, and the Cost per Click (CPC) was very low, only 0.3 yuan. Surprisingly, he received three orders within a week at a cost of less than 500 yuan. And he didn’t need to share any commission with the salesmen. Like many who ran the network marketing campaign in the early stage, Han kept reaping the joy. His business flourished at once. One year later, he received more business from the network than from the seven salesmen. He felt the power of the Internet from that time on.
In 2004, he wanted to increase the sales volume, so he put more investment in Baidu ads. However, things took a turn for the worse. He spent 30,000 yuan on advertising, but the results were not as good as those of the first year with only an investment of thousands of yuan. According to his analysis afterwards, it was because he was so happy at that time that he nearly told everyone about the benefits of Baidu bidding to him. People of the same trade heard of that and took part in it as well. What’s more, the salesmen of Baidu always liked to take shortcuts. If a client in a certain industry was convinced to place ads, the salesmen would tout for business to a dozen more people in the industry, especially for the building materials market, where they could find dozens of clients in a day. As long as your counterparts learned how prosperous your business was, they would follow the lead immediately. The effect of Baidu homepage ads bid by 10 companies was certainly different from that by 100 companies. What’s worse, malicious clicks also appeared in large numbers. In the second half of 2004, it only needed about 1 yuan to rank on the first page. But one day, the ad was clicked by a single IP more than 170 times. It was apparently made by someone of the same trade. Han lodged complaints to Baidu Inc. Although the money couldn’t be retrieved, he got a promise from Baidu: The clicks caused by the same IP within 2 hours only counted as one click (this is Baidu’s earliest method I’ve ever heard to prevent malicious clicks). Since it was not that easy to run Baidu ads anymore, he turned his head to other network channels. He registered as paid member on Alibaba, 58.com and China Building Materials Website. In particular, he spent more than 1,000 yuan on the China Building Materials Website. As a paid member, he could publish a large amount of product information on the platform. At that time, the competition was not very fierce. Therefore, the product information was easy to find in major search engines. With that, Han tasted the sweetness of the network again. But soon his counterparts followed his lead. Within a year, his business was hard to conduct again. In 2005, he invested 70,000 yuan in network promotion, but the business didn’t grow exponentially as expected. In 2006, he saw one of his customers, an industrial decoration company (a company specializing in factory decoration), running his business well. So he tried to carry out the factory decoration business using the network. After a year, the sales (more than 2 million yuan) and profits from it were far higher than from building materials.
In 2007, he got to know me through a friend of ours. I didn’t take on external network marketing business at that time, so when we were together, we just exchanged ideas. But when I suggested he build a website for optimization and natural listings after hearing out his story, he said disdainfully that there was no need, because he could receive business whenever he posted information on the Internet (actually what he meant was to post on the paid China Building Materials Website, not to post free information). My original intention was to recommend him a reasonable network marketing model, but he treated me as a bragging salesman, which made me very uncomfortable. So when parting, we made a deal: I was going to build a website and allow him to use it for three months. After that, he could choose to pay for the subsequent access to the website or pass it on to his counterparts. Given his distrust, I didn’t expect him to gather the information for me to write website content, so I only asked him to provide contact information for me. Then I collected information on the Internet and built the website (www.zhuangxiu1.cn). After a simple optimization and promotion, I became busy with other things. Then, two months after our parting, he called me for a face-to-face talk. Turned out that he just made an order with high profits from a foreign company. After the deal was closed, he asked the customer where he found the company’s information, the customer replied that he found the company on Google by using the search term “factory decoration”. When Han got home, he searched with the same term, and found the website I built for him ranked first. Thus he was determined that I was the one to help him out (Note: Employees in foreign companies are used to using Google for searching instead of Baidu). The other purpose of the meeting he asked for was to plead with me not to build websites for people in his industry. He had really suffered a lot from it. I was still managing the packaging plant at that time and had no time to build other websites, so it was no problem for me. As he expected, as the website ranked higher and higher, there were many of his counterparts approaching me and asking me to build websites for them, and I turned them down as promised. In 2008, his online business had grown to more than 3 million yuan. At my suggestion, he hired a full-time network information clerk responsible for posting free information and taking care of online business.
As promised, I didn’t write website content for his competitors, but as almost all of his relatives were engaged in this industry, he began to ask me to build websites for the companies of his brother-in-law’s, his little brother’s, and his little sister’s. As a result, a similar situation with the blister industry occurred in 2009. When people searched for “factory decoration” on Baidu, the first four of the natural listings were all websites of their family’s, which were all built by me.
Figure 6-13 Search Results of “Factory Decoration” on Baidu (September 25th, 2011)
Given the situation, the four companies often received inquiry calls from the same customer. Good thing that the quotes in the decoration industry couldn’t be made quickly. After all, they were family. At night, they would discuss the budget proposal for the customer over dinner. First, they searched for information about this customer, selected the right building materials and decoration style according to the size of the company, gathered the proposals, and divided them into high, medium, and low grades. Next, they decided who to play the bad cop (to offer high quotes) and who to play the good cop (to offer low quotes). Finally, they went to meet the customer separately, and the one who met later could make adjustments based on the experience of the one meeting first, so as to increase the odds. What’s more, they always switched the roles for the sake of fairness. This kind of joint cooperation certainly had better odds than fighting alone. Even big companies such as Carrefour and Wal-Mart asked them to renovate their supermarkets and warehouses. By 2010, Han’s online business had reached its peak with about 10 million yuan in sales. The companies of his siblings’ also produced outstanding results.