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Commandment of Control: Violations

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MJ DeMarco

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The Commandment of Control is 1 of the 5 Fastlane Commandments.

It states:

As an entrepreneur, you want to control your business whereas no one entity can put you into bankruptcy. For example, will a Google algorithm change kill your business? Will that MLM company go out of business and destroy all you worked for? Will Facebook change its Terms of Service for application calls and all of sudden you're out of business? Did that great affiliate program you've been hocking suddenly stop paying? Or change it's terms and now your shit-out-of-luck? The Commandment of Control eliminates 3rd party risks that can take down your business in one swift stroke. You can either paint your own big picture, or be a swab of paint in someone elses.
(Learn more about the Commandments: https://www.thefastlaneforum.com/community/pages/about/)

I'd like this thread to represent a detailed list of CONTROL VIOLATIONS as they happen in the business world. I'd like to chronicle how businesses get screwed when they rely on ONE company for all their business, sales, or marketing.

See a control violation in the news? Post it here. Please post a link to the article or story that best demonstrates the violation.

A control violation would occur when a large corporation changes one of its policies, procedures, or algorithms, resulting in catastrophic damage to piggy-backed companies.
 
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MJ DeMarco

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Here's one posted by @PeteLife which was posted on the INSIDER forum.

http://valleywag.gawker.com/facebook-is-about-to-make-everyone-pay-1547309811

A source professionally familiar with Facebook's marketing strategy, who requested to remain anonymous, tells Valleywag that the social network is "in the process of" slashing "organic page reach" down to 1 or 2 percent. This would affect "all brands"—meaning an advertising giant like Nike, which has spent a great deal of internet effort collecting over 16 million Facebook likes, would only be able to affect of around a 160,000 of them when it pushes out a post. Companies like Gawker, too, rely on gratis Facebook propagation for a huge amount of their audience. Companies on Facebook will have to pay or be pointless.

As I wrote on the INSIDE pertaining to the possible action.

A great Commandment of Control example, a long list of many.

The take away is that the most important thing you can own is your own LIST of customers. An organization's priority should be sales, followed by your own list building-- not FB likes, not followers, not anything else but what can move the meter AND be perfectly controlled and owned by you. I feel sad for folks who drove traffic to their FB pages where now, only 2% of them can be monetized, or reached.

FB is a tool that is leased by you, and controlled by someone else. If your business is 100% reliant on it, you're asking for trouble. Make your millions fast or suffer later.

The other takeaway is this: If you're spending a fortune on advertising, don't drive traffic to FACEBOOK, drive traffic to your own landing pages so you can collect the data. Give the data to FB or some other company and you don't control it, or how you can use it.
 

Eskil

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Another one is relying completely on sales from Amazon. Amazon is without a doubt a great place to start for many businesses, and can certainly drive lots of business... But - it's important to realize too that you are still at the mercy of a third party if that is where all your sales are coming from.

- Relying on sales only from Amazon is sort of like relying on SEO; They control where your product shows up and is ranked, using their algorithms. There are ways to affect the ranking to a certain extent, but you're still not in control. The same way as you can (or could) somewhat try to affect how you rank in Google.. But Google remains at the wheel for your spots.

- They control what you can and cannot say in your product listings. Amazon's listings give customers trust and credibility, which is great. But since you are confined to their TOS, you are still constricted in some ways. They can also decide to change their rules at any point, or decide that they don't like your wording or images.

- They control which customer reviews get to stay, and which ones will never get deleted (in their attempts to wipe out fake reviews, they have been known to also wipe out lots of legitimate 5-star reviews for many sellers. And...they do NOT delete 1-star reviews, even if they are fake and placed there by competitors!)

- They control your earnings to some degree as well, since it is up to them to decide what fees to charge you, when to change the fees, etc.

P.S. NOT knocking Amazon here, but just saying that relying on them alone does violate the commandment of control.
 

Chadi

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MJ,

I agree on cutting back on FB but if you look at the alternatives you'll probably find that direct mail and email are the best next options for owning your customer list.

Direct mail is expensive (and ineffective for the most part). Email is soon to start losing reach due to noise/spam and lately Gmail introducing the "Promotions" tab which outwardly is meant to "serve" the end-user but it also gives Google the ability to eliminate "promotions" pushing marketers to use their AdWords system. Twitter will probably follow suit.

I think that not only you have to own your customer list but also the distribution channel for that list. In your case you have your own forum which is great, other businesses will opt for the easy solutions (FB in this case) and relinquish control as you indicated.
 

AllenCrawley

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I'm a big believer in owning your customer list. It's the ultimate control but you have to build it first. The big lesson here is to not just rely on any one channel for your business. Don't just rely on amazon or ebay OR facebook use all in tandem with your own website, other social media, seo, other online distribution channels, joint ventures, wholesale, etc.

Direct mail is expensive (and ineffective for the most part). Email is soon to start losing reach due to noise/spam and lately Gmail introducing the "Promotions" tab which outwardly is meant to "serve" the end-user but it also gives Google the ability to eliminate "promotions" pushing marketers to use their AdWords system.

I disagree in part to the above statement. If you already own your customer list direct mail can be highly effective. Even if you had to rent a list you can be very targeted and it could be highly profitable. I think there are lots of opportunities for profitability in direct mail. I usually enjoy getting mail now more than I did 20 years ago. Also there are possibilities to JV with other companies with a direct mail list with the same target market.

I also don't believe email is going anywhere. If people on your email list are customers you can have tremendous open rates and click thru rates. I posted yesterday about a company about a year old now that boosts a 47% open rate with a 13% click rate. That's just amazing. Again there are opportunities to partner with other companies with large email lists that could benefit from your products or services.

Here is a blog post I wrote about 2 years ago. The numbers therein have not been updated but I believe there may not be much change.

Don’t be distracted by the latest shiny marketing object. You know, the rage was all about getting your business on Facebook, then came along Twitter, Mobile and most recently Pinterest has really made a huge splash and all for good reason.

Many so called marketing experts are saying that social media and mobile are killing email. The notion of email ever dying is just laughable because email cannot die – it is the central nervous system of the internet.

But, what I would like to do is provide some perspective.

There are almost 3 BILLION current email users worldwide.

Compare that to the 750 million (active) users on Facebook and the 300 (update 650) million Twitter users. That’s almost three times more email users than the two of the largest social media sites combined!

According to Forrester Research email marketing investments are over $1.5 Billion dollars in 2012 and expected to top $2 Billion by 2014.

Then there’s the 39.4% of marketing industry executives who voted Email Marketing their “Most Powerful Advertising Channel” for their business. (Source: Datran Media survey)

Does that sound like email marketing is dead?

Heck no! It’s not only alive and well – it’s growing and growing.

Let me be blunt. Next time you hear a self proclaimed “Marketing Expert” say email marketing is dead and you need to focus on social media and/or mobile, you’ll know they are full of crap. Now, I’m not telling you to avoid social and mobile – in fact, your overall marketing strategy should include these if they are right for your business.

Just in case what I outlined for you wasn’t convincing enough on why you should be using email in your business – let me share one final statistic…

98% of smartphone owners use email, compared to 97% for texting. (Source: Analysis Mason 5/30/12) So, the number one thing that most smartphone owners do on their phone is access their email. The future is mobile but only when it’s combined with email.

Be diverse in what distribution channels, social media and advertising you use > have your own website > use the aforementioned to build your own list of customers and prospects and data > use direct mail, email and joint ventures to grow further.
 

LibertyForMe

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Here is a toughie - giving YouTube all the control.

http://www.dcclothesline.com/2014/0...ermanently-deleted-youtube-severe-violations/

Mark Dice had a lot of political type videos, and in the article he talks about how he always made sure to stay within TOS. Evidently, YouTube recently added 'super flaggers' who have a lot more power to remove videos they don't like. The NSA is evidently a part of this, and they didn't like what he had to say...

http://variety.com/2014/digital/new...t-aimed-at-copyright-infringement-1201136672/
 

Gabbe18

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Just out of curiosity. If the main way you generate revenue and conduct your business is through a website and you created that website on wordpress, squarespace, etc. and did not program and code the website from scratch, doesn't that violate the commandment of control?
 

thechosen1

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Just out of curiosity. If the main way you generate revenue and conduct your business is through a website and you created that website on wordpress, squarespace, etc. and did not program and code the website from scratch, doesn't that violate the commandment of control?

I know this is a super old thread but this seems like a good enough question to get answered...

Wordpress, squarespace, Google, etc. do have some control over your business, do they not?

But how far do we take this? You will never have complete control.

As a real estate investor, your business could be completely nixed by an eviction moratorium or rent control; you are "owned" by your local, state, and federal government, for example. But real estate investing can still be a great business.

So I guess the answer is that CENTS is not black and white... it's shades of gray (or if you're British, grey ;) )
 

MJ DeMarco

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But how far do we take this? You will never have complete control.

It's like "reasonable doubt" and a function of your product and how you are executing. Control risk elevates when you operate at the edge of ethics or legality. If you are operating a legit business within the margins, I doubt Squarespace, Google, or Wordpress is a risk. But if your legit business has only 1 customer, there is a risk.
 

P789

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Not business-related but related to disaster mitigation. I read a post on facebook about the products on an online store that is ready to ship several hours before the Typhoon Vamco (Ulysses) lashed the capital, Manila. The products were not properly placed on a higher level of the warehouse and when the typhoon makes landfall and while it transverse the island of Luzon, the products of that online store got wet and some of it rendered as useless.

I wonder what the sellers feel when they use that online store to sell their products and one day later, it was rendered useless.
 

P789

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How the recent fiasco caused an Influencer to lose a bulk of followers on Facebook:

View: https://www.facebook.com/rapplerdotcom/posts/4790164071004338


From the news:
From August 4 – the day that Whang Od’s grand niece Grace Palicas called the inclusion of a Whang Od course in Yassin’s online learning platform Nas Academy a “scam” – to August 6, as of publication time, about 306,900 users have unfollowed the page, according to Facebook analytics tool CrowdTangle. The bulk of unfollows came from August 5 at 275,200. The page drops from 20.96 million followers a week ago to 20.68 million.

The post calling out a course a scam.
230347613_10215121224182225_1567624427699534912_n.jpg

It demonstrates that you cannot control the number of followers on FB.
 

TheFrancophile

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Another one is relying completely on sales from Amazon. Amazon is without a doubt a great place to start for many businesses, and can certainly drive lots of business... But - it's important to realize too that you are still at the mercy of a third party if that is where all your sales are coming from.

- Relying on sales only from Amazon is sort of like relying on SEO; They control where your product shows up and is ranked, using their algorithms. There are ways to affect the ranking to a certain extent, but you're still not in control. The same way as you can (or could) somewhat try to affect how you rank in Google.. But Google remains at the wheel for your spots.

(...)

- They control your earnings to some degree as well, since it is up to them to decide what fees to charge you, when to change the fees, etc.
I agree 99% with you. Here in Europe, though, there's even a BIGGER risk when you rely primarily, or wholly, on Amazon for your sales.

Namely, that these days, many Amazon buyers (at least in Europe) order stuff, sign proof of delivery (POD), then, after being delivered, they initiate an A to Z guarantee claim FALSELY claiming that they never received the item, even though proof of delivery from the carrier proves otherwise.

Amazon routinely honors these fraudulent claims (in 99% of cases) and refunds those fraudulent buyers at the (third party) sellers' expense.

Thus, fraudulent buyers (and they are legion in France, Spain, and Italy) can have their cake and eat it, too : their money and your merchandise (at your expense).

This carries a double risk for you:
1) You lose all your sales revenue if your buyer is dishonest ('cause in 99% of cases, AMZ WILL honor their utterly fraudulent claims).
2) But even worse, too many claims (even fraudulent) of failing to deliver can result in your account being suspended or even blocked permanently by AMZ.

If you read French, you can go to the Amazon France Sellers forum and read threads by third-party sellers there who have been screwed by these fraudsters (with the full collaboration of AMZ).

If there ever was a textbook example of a Commandment of Control violation, this is it.

So Amazon should NEVER be your MAIN sales platform. But given its enormous share of the e-commerce on BOTH sides of the ocean, you can't skip it completely.

OTOH, I think the criticism towards Google over SEO is exaggerated. Yes, Google does make algorithm changes everyday, but these have only one purpose:

To ensure that Google users (here in France, that means 90% of all searchers) get the MOST ACCURATE, MOST EXHAUSTIVE info on ANY subject from the most trustworthy websites and, while visiting them, have the best User Experience possible.

That's why Google is even in business. If they fail to provide such results, they're liable to lose market share.

So if you don't want Google's algorithm changes affect your website, quite simply, provide the highest quality content on your subject/merchandise and the best user experience on your website (esp. on mobile) ... and build its authority, especially through links from other quality websites.

And, of course, don't use any black hat tactics like keyword stuffing.

And I know lots of people, including probably @MJDeMarco, are going to disagree, but "relying on SEO/Google" to drive traffic to your website is not a violation of said commandment, because today, EVERYONE who wants to sell online relies on SEO.

Before anyone can come to your site to order/buy anything, they first need to find you... and then be convinced to click on YOUR link rather than someone else's.

This is an inevitable consequence of living in an era where people search for just about anything on the Net.

OTOH, I obviously don't recommend relying on SEO for AdSense income, but that's another subject.
 

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