Category: Coaching

Topics for coaching. I am an economist, so my coaching concerns business life and teaching.

Are Lead Magnets a Cargo Cult for Consultants?

Johannes WinterhalterLeave a comment on Are Lead Magnets a Cargo Cult for Consultants?

My Artificial Intelligence told me a few months ago: your website about pricing has no Lead Magnet. You need a PDF with a checklist for download, in exchange for an e-mail. Once I have the e-mail of the downloader, I can send her or him newsletters and sales mails, until the breakpoint of 8 to 12 contacts is reached. Then the prospect will buy.

The Marketing Myth

Sellers of attention want to make us believe that every seller has to be on top of the attention of many people for an extended time. If not on top, they will buy elsewhere. This permanent attention costs a lot of money, and what is if the targeted group is quite small and the consultant sells not to be in need attention? That is the case for me as a pricing and market reseach consultant.

Lets look into this marketing myth and look there the Cargo Cult analogy is. Cargo Cults emerged after World War II. Islanders on some remote Pacific Islands, who were deeply impressed by goods the US Army left while their presence, tried to attract the “Cargo” again with ritualistic wooden imitations of airport technology. The marketing world is full of marketing analogies to the bamboo antennas and wooden control towers used in Cargo Cults. They are ritualistic imitations of a process that once worked, performed by people who do not understand why it worked.

Here is the breakdown of why modern Lead Magnets are a Cargo Cult, and how to tell the difference between a “ritual” and actual value engineering.

The Anatomy of the Cargo Cult

The term “Cargo Cult” comes from Pacific islanders who, after WWII, built fake airstrips to summon the American planes that brought supplies (“cargo”). They replicated the form (runways, towers, headsets) but lacked the mechanism (global logistics, radio waves, commerce).

In modern marketing, we see the exact same mimicry:

  • The Bamboo Control Tower: This is the generic Landing Page. It looks like a functional page—it has a headline, a hero image, and a submit button. But it connects to nothing of substance.
  • The Coconut Headset: This is the “Ultimate Guide to [X]” PDF. It mimics the shape of value (it’s a document, it has 10 pages), but it contains no actual insight, only fluff or ChatGPT-generated common sense.
  • The Prayer: The belief that if we simply perform the ritual of “putting up a gate,” leads (the Cargo) will naturally arrive and convert into sales.

Why the “Planes” Don’t Land

The original lead magnet strategy (pioneered by direct response marketers decades ago) worked because of a psychological mechanism called The Value Exchange.

The mechanism requires that the value of the information provided is greater than the “cost” of the user giving up their privacy (email address).

Today, the market is flooded with low-quality magnets. The “cost” of giving an email is high (spam risk), and the perceived value of a generic “Top 10 Tips” PDF is near zero. Marketers are building the airstrip, but they have forgotten that the planes only land if there is a reason to land.

The “Ritual” vs. The “Engineering”

You can spot the difference by looking at the intent behind the creation.

The Cargo Cult (Ritual)The Engineer (Strategy)
“I need a lead magnet.”“My customer has a specific gap.”
Creates a PDF because “that’s what you do.”Creates a tool available on request of recommendation. This might solve a problem.
Title: “The Ultimate Guide to…”Title: “Tool to measure possible vulnerability and improvements …”
Goal: Get the email address.Goal: Earn trust by demonstrating competence and do the first step for solving the problem.
Result: User downloads, ignores, unsubscribes.Result: User reads, does the first step, gets a win, respects the author.

When is a Lead Magnet not a Cargo Cult?

A lead magnet is legitimate engineering when it is a Utility.

Instead of a passive document (which users just hoard and never read), effective magnets are often active tools or specific assets that save the user time immediately.

  • Cult: “Whitepaper on Pricing or Data Security.” (Boring, generic, likely unread).
  • Utility: “Vulnerability Scanner for your pricing methods.” (Runs once, gives a result, proves expertise).

Summary

If you are creating a lead magnet because you read a blog post saying “you need a funnel,” for harvesting e-mail adresses which can be further hammered by sending generic newsletters, you are in the Cargo Cult. You are waving flags at an empty sky.

If you are creating a lead magnet because you have identified a painful splinter in your customer’s finger and you are offering the exact pair of tweezers to pull it out—that is marketing.

/

How to Re-Anchor Your Client’s Willingness to Pay

Johannes WinterhalterLeave a comment on How to Re-Anchor Your Client’s Willingness to Pay

and how to avoid leaving money on the table.

When we think about ordering a service and have some information about offers and a clear picture what we want, we have a Latitude of Acceptance of prices in mind. WTP is Willingness to pay for a service or product, and we may need to re-anchor the frame.

Price confidence is not about believing in your value; it’s about having the data to prove the client’s risk is greater than your fee.

Re-Anchor Your Client's WTP to Avoid Leaving Money on the Table -use the Assimilation-Contrast Theory

The Problem: Weak Anchors

As we discussed, most clients default to weak, external anchors:

  • Competitor Prices (External Anchor): Easy to find, but instantly anchors the WTP low, leading to sub-optimal pricing.
  • Trade Association Guidelines (External Anchor): Provides safety, but ignores the consultant’s unique value and capacity.
  • What the client paid for similar projects before (Internal Anchor)

These weak anchors by clients result in an unknown Willingness-to-Buy (WTB) and fear of the Pricing Whiplash on the suppliers side – a wild haggling with prices without foundation. This is if an originally called price is too high or too low, and the seller needs to recalibrate his prices without changing the offer fast. This is the fastest way to loose clients trust.

The Cost of Not Buying, Anchoring It and Sharing It

We may focus on the Cost-of-not buying. When we have this, we have the strongest argument we can get. The latitude of acceptance for the client is drawn by the clients’share of the CoNB. Fortunately identifying the CoNB is not rocket science. I do not want to go into details there because it differs between for example lawyers, hairdressers, graphic designers, coaches and real estate agents.

How AI took my side job – Artificial Intelligence Business Plan

Johannes WinterhalterLeave a comment on How AI took my side job – Artificial Intelligence Business Plan

Until Summer 2024 I offered creating simple business plans for startups. I did that on my website and on Fiverr for about 120 € each. I stopped that for the lack of orders and a lot of weird questions regarding my gig which never ended in a purchase. The prospects were obviously looking for excuses for not ordering my service. Looking at other work about 50% of my personalized offers generate a contract. The gig was meant as entry offer for learning to know each other and sell more services later. I used a template and filled it with data from the client, then I added some treated and interpreted market data to make an earnings prediction. The origin of the data was publicly available sources.

Artificial Intelligince (AI) is really good at working with data and templates from the web. Actually I am using the AI behind Google Gemini. For testing I asked it to write a business plan for a dog grooming business, later I asked it for market data for dog grooming in Germany.

The result was a really nice plan – you can download it here. It was a working example for a plan with estimations done by AI.

For first orientation the plan is really good, and it looks nice. I even think it is possible to apply for a loan at the bank.

I checked the numbers: the market data is quite generic, the assumed sales price is not confirmed by market research, and there are no scenarios. What to expect for free? My former prospects group, who did not want to pay more than 120 € for a business plan, is obviously happy with the very cheap plans delivered by AI.

So Artificial Intelligence took my side job. Maybe it is similar to what they did to map suppliers with their free Google Maps. I use Google Maps frequently and consider it to be technological progress. Google Gemini as one example of an AI chatbot offer requires a subscription for full functionality.

Measuring the qualitiy of artificial intellgence business plan
Measuring the qualitiy of artificial intellgence business plan

How to find investment opportunities that combine getting rich and being a good person?

Johannes Winterhalter

This article is about finding good investment opportunities, getting at least a little rich and being benefactor for society. Reading this article the spirit of Adam Smith, the author of Wealth of the Nations 250 years ago, may be with us.

An investment opportunity is supposed to give us gains and make us happy this way. Posession can satisfy: we are proud of having a part of this enterprise or owning some of these krypto-currencies. If it is possible to make the buyer also happy the world is becoming a better place.

Example: I buy an house for one million Euro. Two years later I sell it for 1.5 million Euro. I enjoy the gain, my buyer enjoys the beautiful he got for his money. Everbody is happy.

I calculated risks and gains and put money on real investment chances, which are a net worth for society. The worth of housing in general did elevate, and my gains are part of that. The house I sold has increased in value, the reason being the higher price the buyer paid,

Another way is to become active, found a business and calculate the perceived earnings per customer

Becoming millionaire with 10 € starting investment in 17 years

Many people got rich with less. For example, starting with 10 € which double themselves every year creates 1.31 million € after only 17 years.

No organism grows continuously over an indefinite time. So the growth will stop after some time. Or the investor looses interest, takes the money and moves to a hurricane-ridden Caribic island to satisfy other human needs and wishes there.

Benefitting society and becoming a little rich is possible

Is there anything in the world I can improve and I get a share of the money created from the use of the thing? This applies even for the ones who make us happy with their videos on tiktok or YouTube. Marc Zuckerberg created Facebook and got rich with that. He forced  competitors out of business. His solution worked better and therefore he had more users and more advertising.

Let’s talk about a investor called Robert. He likes to sell and buy real estate or shares on real estate. Also he wants to contribute to modernization of energy supply. At this moment he has about 50.000 € available. Also he is thinking about selling natural dogfood online. He read that this can be a nice sidejob with little investment.

At first Robert is confused of the many good and bad investment opportunities. What does need to free his entrepreneurial spirit?

From an economical view, getting rich also means to benefit society. People buy things which are useful for them. The entrepreneur provides these goods and services and keeps a part of the revenue.

To find an easy way full of fun to success Robert has to consider the following:

1. What he likes to do

2. What others like him to do

3. What he think he likes to do ( notice the difference to #1 – this is about self-reception)

4. What Robert believes others want to buy from or the enterprise he bought a share

5. The limits of his environment – the world is bigger than the area he can take notice of

6. The hard numbers – is there really a big market for the products?

7. Where he can really improve the perceived life situation of others.

What is the next step?, Ok, consulting me or another business coach/consultant looks good. Some can discuss the matters with mentors and friends, who are good in business, others do better with paid assistance.

After having a free mind without barriers from culture and family background, there is a chance to see the next big thing, for you and society.

The real important steps are:

#7 is the most important thing: this is your working next best thing.

For researching #4 and #6 I am a good fit. I have a lot of data for calculating your market and possible success.

Robert looks for a good way to invest his money and having control about his money

Separating good investments from bad investments is similar to start an own business. Robert has to look at point 4 to 7 of the previous paragraph and do the analysis. If all goes well, he wants to buy. Thats it – buy after best possible analysis and wait for earnings. The investments have to be checked regularly and maybe sold at the right time.

More Success in Price Negotiations With Decision Tree

Johannes Winterhalter

Going into price negotiations without a lot of preliminary information mostly ends up in suboptimal results. This post is about structuring in the information in a decision tree stuffed with probabilities for the events. These probabilities are the result of market research.

The party with the most information has advantages in negotiations. They know the negotiation scope of the other side and th bargaining power do both sides. Other questios are: What do I want? How to avoid getting lost in bargaining? After looking into auctions, where for psychological reasons it is difficult to make rational decisions, I look at the decision tree with estimated earnings and probabilities.

Auctions – the risc of following the group

Auctions are popular for antiques, used items and real estate. In the bidding war the offers may run away while the auctionator counts highet and higher. This war requires at least two bidders. Participants see and hear competitors bid higher and higher and infect one another. The bidding continues, so the race goes on for not having a defeat. Giving up means the object is gone. Due to the short decision-making period and the group, spontaneous decisions are made, which be confirmed experimentally. As soon as the bid is accepted, the bidder goes back to his rational normal and recalculates: the high purchase price makes the investment unprofitable. The buyer tries to get out of the contract. This phenomenon occurs less often if a security deposit to be presented limits the bids.

How a decision tree helps

We try to look at every possible scenario and calculate the probability of that scenario. The example is about a freelance teacher, who applies for teaching a class. How much money will she get?

decision tree usable for price negotiation – probabiliy and earnings

Sandra is applying to be a lecturer at the Montgomery Training Center. She has no experience and is pretty much broke right now, so she urgently needs paid work, her lower limit is 20 euros an hour. But she wants to achieve the maximum possible hourly rate in order to look good in front of her friends and colleagues and to earn money.

Sandra negotiantes with the dean, Ms. Dr. Teufel. She wants more earnings for the school and save money spent on teacher salaries. If teachers are scarce or one has special qualifications, she can pay up to 40 euros per hour. She tells the applicants that there are lecturers who work almost on a voluntary basis. So it tests their price scope downwards. That the training center also hires expensive lecturers is not for the appliants ears.

Doing background research helps

Sandra asks herself how much she could ask. She estimates that the school can spend up to 50% of the participiants fees for lecturers salaries[2] . The difficult question about the income of the training center can be answered with the help of price lists of the company, sales figures from the Federal Gazette (corporations have to publish there), inquired or estimated numbers of participants. Sandra does the math and comes to a maximum of 40 € per hour.

Sandra analyzes her competition. What is the likelihood that another qualified person will do it cheaper? This is very high when teaching in university cities. Public statistics on wage levels can help, or a survey among friends. Industry associations often have fee statistics. She heard from friends that they often only pay 25 euros per lesson. So what to do in the price negotiations?

Price Negotiations and Background Research: Add Probabilities to the decision tree and play with scenarios

The probability that a sufficiently qualified applicant appears charging only charges 25 euros per hour is 50%. Let’s figure out whether Sandra should play it safe and demand 25 euros per hour or whether it is worth asking 40 euros per hour. The contract lasts for 200 hours, i.e. 5000 euros at 25 euros per hour and 8000 euros at 40 euros per hour.

Sandra realizes that she still doesn’t know enough about the lecturer market. What is the probability that in the case of a rejection by Dr. Teufel, a new job of the same type appears that brings in at least € 40 an hour? It is not possible to ask the competition, they will hardly tell the truth. Miss Dr. The devil is also talking about volunteering, so no wages at all.

Looking at the decision tree: if demanding 25 € per hour Sandra has the job safe and gets 5000 Euros. Demanding 40 € there is a 50% chance that she will earn 8000 Euro and 50% that she needs to go cleaning houses for 12,50 Euro each hour, that makes 2500 €. In addition and weighted by probability this goes to 5250 €, slightly more than talking about the low price.

External Factors – Prestige and Feeling Safe

Sandra possibly thinks she definitely needs the teaching job. She no longer wants to clean and needs references. Then she plays safe and only charges 25 € per hour. Demanding high prices is only worthwhile to a limited extent, as the previous analysis shows. The opportunity costs in the form of stressed nerves can be an argument for low claims.[3]
————————————————————–

  1. [2] To know this average value, information about the business model of the schools is necessary. The basis is the commercial calculation with cost price, handling costs – and profit surcharge and sales price. The lecturer’s fee is the cost price, the remuneration paid by the participants per lesson is the sales price. The trading surcharge includes rooms, advertising, administration and risk. [3]
  2. [3] Between 2008 to 2010 I did some tests with groups of 30 participants about that subject. The results were that very young people tend to ask too little money, older people tend to ask too much in price negotiations for work.

Forecasting and Storytelling – our personal history and decision taking

Johannes Winterhalter

Asked for predictions and future trends, younger people and elders forecast a different future. The judgement is based on past experiences, where the elders had a longer time to watch. Now there is research which uses stock market predictions and inflation expectation taken from surveys to measure different estimations of future values in age groups.

Ulrike Malmendier and Jessica Wachter show in their paper how long time experience correlates with investment decisions. People with long experience include old information in their judgments. Do they make better predictions? The study has no answer for that.

Past experiences stick. Did you ever notice the warm emotions showing up when memories to a nice situation long ago appear? Another nice thing of the past is that we know how all ended. And we can connect with others about the long gone events.

For the ones who follow politcs: party members choosing a candidate in primary eclectoins are mostly elder and more extreme than the ones who vote at the general elections. So their candidate might have problems.

Artificial Intelligence has no memory

Humans differ from artificial intelligence in learning. AI connects the data and learns from what was in short sight. Humans take their whole life experience together and build their judgements on that.

Hiding the past helps sometimes

There is a connection between memories memories in market research and in own, personal ways to think and judge. Discovering the role of memories in own judgements and being able to switch it on and off helps to get a better picture of the world of younger people. It is about trying to look at the world while leaving out past memories.

Having a long memory may be helpful in forecasts and judgements. Mathematical evidence from the stock market does not give any proof for that.

Customer journey and past experiences in market research

Along a customer journey the traveller takes a lot of decisions. Will old memories take a big influence on that decision? Research shows it does. Big example are cars. Seniors buy different and bigger cars.

The influence of past experiences in market resarch
Getting Advice from Groups – are THEY good for that (from: Are Crooks dishonest)

Village Storytelling And Advertising Today

Johannes Winterhalter

The article is about storytelling in village communities still observed in the 21th century, conspiration theories and modern advertising. My experience as longtime villager and suburb dweller helped me.

I am living in the same village I spent my childhood some years ago. There are still many natives, some of them never moved out of their parents and grandparents house. They tell stories about families in the village, what they do, what the members of that families do and their fates.

Wondering why I did not know anybody mentioned in the stories while quite many villagers from associations, businesses and events, I asked the storytellers who these people are. The commone response was how could it happen that I do not know the people from the stories.

The characters are fictional. It is similar to movies many people have seen. Everybody is expected to know the story of the movie, and some words go into common language, like “catfishing” (pretending to be another person online), “gaslighting” (making somebody questioning their own reality) and “weinsteining” (behaviour close to what Harvey Weinstein is imprisoned for).

Village storytelling, repeatedly told by villagers, are the local kind of the bigger stories in movies. The stories connect the community. In the neighbouring village they have other stories the locals do not know.

Modern conspiration theories follow a similar scheme. Insiders know the story, and they feel the knowledge makes them much smarter or at least better informed than others.

What do we do with that information? There are stories others impose on us with the argument “As long you do not know the story you do not belong to us” or they use for gaslighting us. These stories are not worth anything for anybody except for the teller. There are other stories well told and worth remembering and retelling, for example “Good Wife”. Newly elected governments might also suffer the comparison between their results and the stories they told before election.

Using A Group For Improving Advice

Johannes Winterhalter

This post is about using group decisions for personal development and avoiding the trap of getting contradictory advice. A scaled down method from social research is useful to get better advice for personal and business matters.

“Guter Rat ist teuer” (Good advice is expensive) is an old German meme. Jokes transfered that to “Guter Rad ist teuer”, meaning a good bicycle is expensive. This is also true for getting good advice in transition periods, where many of us are vulnerable and insecure.

Some annoying people give unwanted advice. Their motivation is to lift themselves and their self-esteem by influencing somebody to change behaviour. Social and market researchers exclude some participiants for the reason that their opinion is not helpful. For personal and business growth it is important to ignore them too.

We like to ask people we know and we trust. They tell us their opinion looking from their own situation. For giving best advice they are supposed to leave their world and go into the thought system of the one they want to help. That is not easy to do and it is prone to errors. Example: I (the author) am really good at fixing cars and bikes. I am inclined to I think everbody can do that. For many people that skill is not important, so they cant, and I have to consider that if giving advice.

So, what to do, to not fall into despair after the first advice from a friend, collegue or coworker or fall into more despair after getting different advice and statements from different people.

How about asking for example 20 people, and write down or memorize the answers. If the same answer appears more often, there must be some reason behind it. I do not include the statistical proof for that right now.

For me that technique solved a personal problem: I generally do not trust human authorities. I think most of them are somehow crazy, corrupt and stupid. How to find truthful information with this precondition? I want to participate at the wisdom of humanity. My solution is finding opinions and statements which are similar – if many rely in the same facts, there must be some truth in it.

Another way for solving similar problems you might find here: Price Negotiations and Decision Tree. There you make a decision tree and add probabilities to each event.

Predict the number of future clients – howto

Johannes Winterhalter

Total addressable market analysis – what does it mean for your plans

To predict the number of future customers we use Total Addressable Market analysis, TAM. The technical term TAM refers to the number of possible customers and the number of products that they will buy as a whole. This is the full market. If you sell cars, everyone can be your customer. There are competitors, and not everyone is going to buy cars from a new producer. So the number of cars you are going to sell is smaller like the market for automobiles. If you want to sell Yoga classes, everyone is a potential customer as well. The vast majority of clients for Yoga classes are women, which decreases the number of clients. People who need to go over 30 kilometers for the workout are unlikely to buy your lessons. For a year now, Covid-19 has been a big problem – either lessons together in a gym are prohibited, or older clients do not want to come due to fear of infection.

The total addressable market narrows down to the servicable accessible market.

These are the customers who may be ever hear from you and suscept you as your potential supplier. You have to be able to sell your products to them. This is much closer to the reality and is one step calculating your future sales.

The third and most important technical term is the “_S_ervicable _O_btainable _M_Market”, SOM. These are the real customers, the ones you can serve and the ones who want to buy your products. They need to know your products and services.

The math

For calculationg, demographic statistics are important. These data indicate the number of people in the target region.

How to find the number of potential customers? The primary source is Wikipedia (really) and the governmental Statistics Office. Their data is normally free. The state administration places great value on correct data. They use this to distribute taxpayer money.

You can find more than population data there. The number of dairy cows is also there, and a lot of the data by economy. So it is possible to predict the number of future clients.

Boutique market researchers sell premanufactured reports

Using google to search for the data you arrive at several websites that are trying to sell industry reports. The normal price for these reports is between 800 and 3700 Euros. On my Fiverr account, a website that acts as an intermediary between freelancers, a lot of requests are aimed at selling these reports for less, say 80 €. The reason the prices are so high is that the authors use the most expensive data, for example at Bloomberg.

Is it necessary to pay more? For small entrepreneurs who offer specialized products, the answer is no. The reason is: it doesn’t say anything which we can use to predict the number of future customers.

Data Quality needed to predict the number of future clients

To estimate the SOM, industry associations offer a lot of data. Perhaps this data is old, but there are no or little fees.

The internet offeres a lot ot data about what is popular with users and what they think an want. That data is hard to find and to be familiar with with web evaluation and web scraping ist helpful. In 2020 I worked on a market study for flower pots. There was a lot of data coming from the associations of the friends of the gardens. They show me that all people love their garden and their flowers more and more. Are the data true and dear to the seller of the flower pots? How much money do they want to spend on the jars? What appearance will they like? Lots of work to do.

Quick and only a little dirty

For very quick results it is possible to do an analysis of reviews on Amazon and other sellers. There is software to do this. Youtube is full of videos that show you this technique. Here are some basics how to analyze that (German) and how I do it.