A Marketing Process That Built Two 7-Figure Companies in Three Years

Source http://feedproxy.google.com/~r/KISSmetrics/~3/5Rwki8FKt4U/

The marketing process I will share with you today built back-to-back 7-figure companies (a software company in 20 months and an ecommerce company in 12 months).

The software company, Bloomfire, was acquired for 7 figures at month 20 and is continuing to grow today, with $18 million in total funding. I was its second employee and first marketer.

When I later founded an ecommerce company, my marketing process was so fine-tuned I was able to work a day job as Director of Customer Acquisition and Success at KISSmetrics at the same time.

I’ve “sold” this marketing process to companies that hired me as a consultant. Now, I’m giving it away in this post. What you will read is applicable for solopreneurs as well as teams of 10+ marketers.

Before we begin, let’s assume every marketing campaign goes through 4 phases. (I call them discovery, traction, maximization, and King of the Hill.) By creating a process that addresses all 4 phases, we focus our marketing on definable goals. It helps us work smarter, not just harder.

To grow 7-figure companies rapidly, speed is obviously key. Every marketer aspires to be fast, so here’s how I erase a common bottleneck: my marketing rarely depends on outsiders. For example, rather than waiting for engineering and design teammates to build needed technology, my marketers cobble together the technology by using off-the-shelf solutions like Unbounce and Zapier.

Because most companies have departments with differing goals, marketing priorities rarely line up with engineering and design priorities. That means marketing requests are often placed on the engineering and design backburner, which slows down marketing. It doesn’t have to be that way.

As we go through this 4-phase process, I’m also going to cover:

  • How I generated 100 marketing ideas in 10 minutes with a team of software engineers. Imagine how many ideas you can generate with a team of experienced marketers.
  • When to kill an unprofitable campaign and when to keep it.
  • Why optimization is overrated and why you should try something different. What that something is may surprise you.
  • When to hire expensive marketing agencies and consultants and when to avoid them.
  • My step-by-step guide to planning and executing a 3-month marketing plan.

So, let’s begin.

Phase 1 – Discovery

“Hey marketing team. It’s time to ramp up sales for our product. Can you take it from here?”

It’s time to throw ideas at the wall and discover what sticks. Fast.

The right attitude during this stage is a willingness to experiment with new ideas. I personally keep an Evernote of winning campaigns. It’s my idea bank. When marketers like Claude Hopkins, Lester Wunderman, Eugene Schwartz, and Joe Sugarman make the time to write books about their winning campaigns, I read them to add to my idea bank.

Keep an open mind because you may be amazed by what generates revenue. Of course, while you’re throwing ideas at the wall, you must stay disciplined and measure sales in order to quickly see what’s working and what isn’t. I prefer using KISSmetrics to measure sales.

Your first key metric – pace.

In other words, how quickly can you throw ideas at the wall?

It doesn’t take a rocket scientist to realize that you’re more likely to find something that sticks when you’re throwing buckets of ideas at the wall. That’s why I carry an idea bank with me so I have buckets of ideas at the ready.

I also have an exercise for pulling ideas out of thin air, which I call The Index Card Exercise. I used it to generate over 100 ideas in 10 minutes with a team of software engineers. Imagine what you’ll achieve when you take experienced marketers through this exercise. Don’t let the boring name fool you. This works.

Quick note: Each marketing idea will take a different amount of time to play out, so don’t rush an idea just to keep up a certain pace. The time it takes to write an eBook to give away will take more time than simply buying Facebook ads. Be fair to each idea’s timeline, but still act with urgency.

The Index Card Exercise

You can do this by yourself, or pull your team together into a room, around a table, and close the door.

First, take a big stack of index cards and some big, fat permanent markers. Hand everyone their own stack of index cards, and set a timer for 3 minutes. Tell everyone that in those 3 minutes, their goal is to write down as many marketing ideas for your new product/service as possible. They should use a separate card for each idea. (That’s why you want big, fat permanent markers, because there is room for only one idea on each card.)

Now, the first time you run through this it may be hard for people to come up with tons of ideas. So, challenge your team to stretch for a goal of 20 ideas in those 3 minutes. It’s okay if no one actually produces 20 ideas. The whole point of setting a target is to make people reach and try harder.

A word of caution: People will second-guess the quality of their ideas. That’s normal, but don’t get hung up on quality just yet. Filtering for quality comes later. Right now, the goal is volume. Just keep cranking out those ideas. I recommend explaining this to your team.

Ding! Ding! Ding! When the timer rings, everyone should put down their cards and markers. The table is now covered with index cards. Awesome!

Walk around the table and briefly talk through unclear ideas so everyone has a definite understanding of what each one entails. There probably will be cards that say something like “advertising,” and you’ll want to be clear whether “advertising” is a Super Bowl commercial or promoted tweets.

As your team reviews the first batch of ideas, more ideas will emerge, so keep extra notecards (and markers) around so you can capture those new ideas. Ideas have a way of multiplying, so keep them flowing!

As the momentum slows down, set the timer for another 3 minutes, and come up with another round of ideas. Discuss them. Once you’re done, it’s time to prioritize.

Prioritize Ideas

The first criterion you’ll use to prioritize your ideas is the amount of resources they’ll take to execute. Use a scale of 1 to 4. A “1” takes a ton of time and money to implement, and a “4” takes very little time and money. I usually write the numbers on each card’s corners, with each corner representing different criteria.

The next criterion is likelihood of a home run on a scale of 1 to 4. A “1” is very unlikely, and a “4” is very likely. Now, it’s impossible to actually predict a home run idea, but that’s okay. Simply discussing how an idea may become a home run is already a productive exercise. Then, go with your gut and write down a number on another corner.

Your third criterion is reach. In other words, how many people will your idea reach? A “1” is an idea with little reach. For example, door-to-door sales has the reach of 1. A “4” is an idea with huge reach. For example, a Super Bowl ad is a 4 because you create one amazing asset that will reach millions of people when it airs, and then even more on YouTube.

Mark every card for how it scores for each criterion. By the end, every card will carry 3 scores for the 3 criteria. You can see which cards score the highest by writing each card’s total on the card. The max score will be 12 (3 x 4), so cards that score a 12 will be at the top of the heap.

Once you’ve had the lightning rounds to come up with your 100 ideas, the whole process to prioritize them can take anywhere from 4 to 8 hours to complete. If you want to shorten the process, invite each team member to pick a handful of their favorite ideas to be scored.

By the end of the process, you’ll have the components for your marketing plan. Participants are usually in agreement, so you can start scheduling your marketing activities for the quarter. Remember to respect that each idea will have its own timeline, and plan the quarter accordingly.

Bonus: Check out the final section of this article for a how-to guide on organizing a 3-month marketing plan!

I recommend your team post all the index cards on the wall in a public place where everyone can see them when they walk by. Place an idea box nearby with a stack of blank index cards and markers. This encourages more ideas to flow, and sends a cultural message to keep up the creativity. The next time you need more ideas, you’ll already have a head start because of the idea box.

Now, it’s time for the next step: finding out if your ideas actually stick.
What is the definition of an idea that sticks? Sales.

On to Phase 2.

Phase 2 – Traction

This phase got me hooked on marketing 10 years ago, and it still jazzes me.

You know your idea has traction when it’s pulling in sales consistently. What you’re looking for is steady, predictable sales from your marketing idea so you know your early sales weren’t flukes.

Your second key metric – sales volume.

Traction indicates that you’ve figured out how to manufacture sales out of thin air.

Notice that I said how to sustain and grow sales, not just sustain and grow sales. The how-to part is most important right now because it’s all about the exact process for manufacturing sales. (We will focus on improving that process in order to maximize your sales in the next phase.)

Here is my 3-step method for figuring out the “how to” process from scratch:

  1. List all your assumptions.
  2. Plan the fastest ways to test each assumption.
  3. Execute tests quickly, maybe even simultaneously if there’s no interference.

I’ll share my actual campaign log from a recent product launch to illustrate how this 3-step method works:

Recently, I bought a content website that was pulling in about 100,000 visitors per month. When I bought it, the website’s main source of revenue was Google AdSense, which is banner ads powered by Google. I thought I could monetize better because I have lots of experience selling digital goods on content sites.

So, I spent a week creating a prototype of a digital product. That was my big idea: draw visitors’ attention to my digital product, and it will sell. I knew I didn’t need a super polished product to test this idea. All I needed was something good enough to sell. Fast.

Rather than spending a year developing a product that might not sell, I spent a week developing a low-fidelity product, so that I could figure out how to sell it profitably. If the low-fidelity product got traction, I could decide to invest time in improving product quality.

Step 1: I made a list of assumptions.

  1. I can build an email list with the site’s existing audience.
  2. Email marketing will pull in sales.
  3. Website visitors will buy a digital product and pay a 1-time fee.
  4. Website visitors will buy and pay a monthly subscription fee.
  5. Sales events will pull in sales.

These assumptions came out of the marketing strategy I had in mind, which is straight out of the retail marketing playbook. (Retail marketing is the kind of marketing grocery stores do.) Your assumptions will vary based on your marketing experience, your product, your audience, and your distribution channels, to name a few.

Step 2: After listing my assumptions, I began planning the fastest ways to test them. For assumption #1, I planned to write a piece of content to give away in exchange for email addresses.

Step 3: After spending a half day creating super simple content (which could be improved later), I executed a test of my first assumption by planting an offer on a highly-visited page of my website. Within 30 minutes, a visitor filled out the form on my webpage to obtain my content. Within half a day, I had begun to build my email list. Within 24 hours, I had around 20 email addresses.

Now, I knew I could get more than 20 email addresses per day if I planted my offer on more pages of my site, but I held off, because my goal was simply to test my assumption. The initial assumption was, “I can build an email list with the site’s existing audience.” Getting those 20 email addresses validated my assumption, so I moved on to quickly test the remaining assumptions and get sales.

For assumptions #2-5, I planned on emailing my new list a steep discount for the prototype product. I’d offer 2 payment options: a 1-time payment and a monthly subscription. I intentionally raised the sticker price so I could discount it without killing profits. Retail businesses do this all the time by raising product prices before announcing “a winter savings event: 30% off everything in the store!!!!”

After doing other things for a few days to let my mailing list grow, I eventually spent a day configuring the shopping cart and writing an email announcing a 50% off sale. I scheduled the email for 3am PST the next day.

The email was sent out, and, within 48 hours, I got my first sale. Hooray! Time for some ice cream.

Word to the wise: When a new idea gets traction, take a moment to celebrate. If your team has been paddling hard, a little celebration can make all the difference in morale. I like buying ice cream for everyone. Just make sure no one is allergic to dairy.

I got lucky, too. Someone who traded his email for my content also bought at full price before my email went out. (My content linked to my product.) I didn’t expect that because I had inflated the sticker price.

I knew I was close to validating assumptions #2-5, but to make sure my first sales weren’t flukes, I emailed another sale weeks later. The result? More sales. In the weeks between both emails, a few more people bought at full price.

Within a month, I had tested my key assumptions, and I knew exactly how to sustain and grow sales:

  1. Grow my email list.
  2. Email a lot of sales. Retail stores do this all the time with their fliers. I can recycle their tactics and announce Labor Day Sales, Black Friday Sales, Customer Appreciation Day Sales, etc.

Make sure you measure traction.

Because we’re talking about traction, now’s a good time to discuss analytics. You’ll want to set up your analytics to determine which Phase 2 assumptions are getting traction. In KISSmetrics, I fire unique properties for people arriving on my pages from different campaigns. Then, I fire conversion events when people buy. That’s all I really need for now to measure traction for each assumption being implemented.

I also think ahead and choose analytics solutions which integrate with tools I’ll use in Phase 3, such as Unbounce for A/B testing. KISSmetrics gets the job done for me and integrates with Unbounce.

You want your analytics to show you which sale came from which campaign. That seems obvious, but doing this right is sometimes easier said than done. One way to make life easier for yourself is to use coupons. Then, just remember which coupon you present in each marketing campaign, and you’ll know which campaign is working by how many coupons are redeemed.

At the end of Phase 2, your marketing ideas may be generating revenue, but may not be profitable yet. I’m usually fine with that if I have some idea of how I’ll cut costs to reach profitability. Now that I have traction and I’ve figured out the process for how to manufacture sales, I move on to Phase 3.

Phase 3 – Maximization

Awesome! Now that we have some traction, it’s time to start turning the volume up on the campaign to maximize revenue.

Your third key metric – profit.

I hear a lot of marketers use the word optimize, but I’m intentionally using the word maximize rather than optimize. Here’s the difference between merely optimizing a campaign versus maximizing it:

Many marketers approach Phase 3 with the goal of optimizing a marketing campaign by boosting click-throughs and conversions through A/B tests. Maximizing profitability is much more than boosting click-throughs and conversions because sometimes decreasing your click-through rate can increase the profitability of your campaign.

For example, a year ago, I was working on an AdWords campaign for a nutritional supplement. A particular ad was generating sales, and my click-through rate was a reasonable 10-12%. Each sale was costing me around $20 in clicks, which was a problem because that $20 cost ate up all my profits. It was a good problem to have because at least I had traction, so I just needed to maximize the campaign.

Because I had a maximization mindset, I didn’t aim to increase click-throughs. Instead, I decreased them. I changed the copy in my ad to filter out people who weren’t going to buy in the first place. The click-through rate dropped to 8-10%, and my cost per sale dropped below $20, to $15.

Now, the campaign was making a profit. The copy change I made was from “X% off Acme Product” to “X% off a 2-Pack of Acme product.”

An added benefit to selling 2 units instead of just single units is larger profits per sale because the average order size doubled! Each sale now cost $15 instead of $20, and I increased profits simultaneously.

Over time, I continued tweaking that campaign to get costs down to around $10 per sale. I didn’t tweak the copy as much, but I tweaked keywords. I also introduced sales events that corresponded with seasons (e.g., Winter Sale, Spring Sale).

A bit of context: I spent a month maximizing this campaign. Much of the time was spent waiting for statistical significance on new ad variations. I always use KISSmetrics’s free A/B Significance Test to help me.

Become a Copywriting Wizard

Notice that the difference between an unprofitable ad and a profitable ad is a few word changes. Copywriting can transform losing campaigns into winning campaigns. I recommend reading Breakthrough Advertising by the legendary Eugene Schwartz to get you started. If you want to hire a copywriter, make sure the copywriter has a portfolio of winning campaigns. If the copywriter can’t prove that his or her work has pulled in sales, then chances are the copywriter is an amateur.

Practice copywriting. Writing is like anything else: The more you do it, the better you get. I write nearly every day, and I’m still no Joe Sugarman.

Remember that your goal in this phase is to maximize the spread between cost and revenue. Spending $1 to make $2 is fine. Spending $1 to make $20 is better.

Phase 4 — King of the Hill

Kids can make a game out of anything. When I was growing up, my friends and I would play King of the Hill when we had nothing but a steep hill to play on. Here’s how the game worked: Everyone started at the bottom of the hill. When someone yelled “Go,” everyone clamored for the top of the hill. Whoever got to the top first would fight off the others to keep the top spot.

If we imagine marketing campaigns as robotic salespeople we build to sell for us 24-7, then we will always have the top salesperson (King/Queen of the Hill), salesperson #2, salesperson #3, etc. I like fostering a sense of healthy competition.

Sales teams routinely recognize the best-performing salesperson and fire underperformers in order to build the highest-performing team possible. I urge marketing teams to recognize winning campaigns and fire losing campaigns. The goal is to develop a culture where marketing campaigns work to outdo each other in order to bring back the most profits.

Culture always starts with people, and in a marketing context, that includes your internal marketing team and external marketing partners such as consultants, agencies, and affiliates. Hiring great people is a topic written about in tons of books, and I urge you to read them. I won’t discuss too much of that here. Instead, let me share my thoughts on how to organize your internal and external marketers for Phase 4 to make the most profit.

Organize Your Internal Marketing Team

My role model for organizing internal marketers is Chris Finken, co-founder of OrangeSoda, an Inc. 500 marketing agency that grew from 3 co-founders to over 100 employees in about 5 years. OrangeSoda was acquired by Deluxe, a public company, for a cool 8 figures.

Finken has an amazingly effective philosophy for organizing internal marketers. He starts by personally discovering campaigns (Phase 1), and then, once a campaign gets traction (Phase 2), he hires folks to learn the campaign as he maximizes it (Phase 3). He makes a judgment call sometime during Phase 3 to hand off the campaign to the new hires so he can circle back to discovering more campaigns. Rinse and repeat.

When we break down Finken’s philosophy, notice that there really are just 2 marketing jobs:

  1. Discovery – Finken does this himself. I prefer doing this job, too. Marketers who prefer this job are skilled at all 4 Phases. They need freedom to do all 4 Phases with minimal interruption because speed is everything. They hate red tape, slow-moving bureaucracy, and meetings that have no purpose. If you’re in charge of discovery people, simply set them up for success and get out of their way.
  2. Channel Management – Successful campaigns must continue running reliably because if they stop running, revenue stops. Marketers who prefer this job never miss a deadline (in fact, they’re usually ahead of the deadline). They’re coachable because they’re sometimes trained by discovery people to take what’s handed over. They know how well their campaigns are performing, and they know the metrics that back up their performance reports.

If you’re a marketing team leader and you want to build a career ladder into your marketing team, I recommend promoting entry-level channel managers into discovery.

With Chris Finken’s philosophy, discovery marketers are constantly adding new campaigns to jockey for King of the Hill, and channel managers are constantly prodding existing campaigns up The Hill.

Consider Hiring External Marketing Partners

I might involve external marketing partners to help improve already-profitable campaigns and push them higher up The Hill. If a campaign is profitable enough, I might invest a portion of profits into hiring copywriting consultants or marketing agencies.

For example, let’s say I’m managing a radio spot that’s generating solid profits (yes, radio still works). I’ll hire copywriters to write a new radio spot. We’ll air that in a controlled manner in hopes of discovering a new script that outperforms our current script. If that happens, the copywriter was worth the investment because the additional profits from the new version will more than pay the copywriter’s expensive fee.

Just be really careful when hiring expensive consultants and agencies. I won’t entertain a conversation with a consultant or agency unless they show me a winning portfolio of campaigns selling similar products or services. Those folks are rare. Most just boast about increasing click-throughs and conversions, but we already know that higher profits can sometimes come from lower click-throughs and fewer conversions. Don’t be fooled by slick salespeople.

Affiliates are another type of external partner. I prefer involving affiliates only when I have the analytics in place to watch how affiliates are bringing in new sales. I like learning from successful affiliates because their ideas can spark new ideas.

There are basically 2 different types of affiliates in terms of profitability. The first type is the normal affiliate, who will send you a small number of conversions each month. From an 80/20 perspective, they will make up about 20% of your affiliate sales. They aren’t a huge opportunity on their own, but if you can get a lot of normal affiliates at scale, you’re making money.

The second type of affiliate is the super affiliate. These are the folks who will drive 80% (or more) of your affiliate sales. Consider offering them higher commissions in return for meeting specific revenue and conversion goals.

Amazon Associates is one of the oldest affiliate programs around. (Full disclosure: I’m an Amazon Associate.) Amazon incentivizes their affiliates by increasing commissions every time they pass a certain number of sales.

As you can see, internal marketers and external marketers can all participate in King of the Hill by adding new campaigns to the game or maximizing existing campaigns. Analytics is the scorekeeper. Without it, you won’t know which campaign is more profitable than another, which means you’ll struggle to know which campaign to invest in and which campaign to fire. If you don’t have analytics expertise, consider investing a portion of your profits into hiring the expertise. It’s worth it, especially when you’re in Phase 4.

A Step-by-step Guide to Planning and Executing a 3-month Marketing Plan

Let me share how I actually apply these 4 Phases, step-by-step. I do this when I’m going solo and also when leading teammates.

Step 1: Draw a timeline

On a large blank whiteboard near your marketing team, draw a horizontal 3-month timeline with vertical markers for each week.

Step 2: Break your index card ideas into smaller tasks

Do you remember the index card exercise near the beginning of this article? When you complete the exercise, you have a stack of prioritized ideas on index cards. Pull out the top-ranked card and break the idea into 2-hour, half-day, and full-day tasks with your team. Involving your teammates is crucial if you want buy-in. Then, write each task on different-colored sticky notes (e.g., red for 2-hour, blue for half-day, green for full-day).

For example, if the index card says “YouTube ads,” the breakdown might look like this:

  • Half-day: Collect inspiration of YouTube ads by similar products.
  • 2-hour: List out every claim and every benefit announced by every ad. Highlight the claims and benefits your product/service can also make. Add additional claims and benefits not seen in other ads.
  • 2-hour: Find as many YouTube placement opportunities for your ad as possible.
  • 2-hour: Decide which placements to test.
  • Full-day: Write as many scripts as possible for your ad and incorporate as many claims and benefits as possible.
  • 2-hour: Decide on a script for your test.
  • Full-day: Storyboard video and finalize script.
  • Full-day: Shoot/create the video.
  • 2 Full-days: Edit the video.
  • Full-day: Edit the audio.
  • 2-hour: Finalize video and start rendering.
  • Half-day: Draft landing page the video links to.
  • Hull-day: Polish landing page the video links to.
  • Half-day: Set up analytics to track profits pulled in by the video. Document relevant codes and UTM parameters.
  • 2-hour: Test the entire flow and make sure everything, including analytics, is working.
  • 2-hour: Launch the video ad on YouTube.
  • 2-hour: Analyze results when the campaign reaches statistical significance.

Never forget to include that last task – analysis. Without it, there’s no way to know if your idea has traction. Analysis can take a lot of time, but with some foresight, you can set yourself up for an easier analysis task later. During the planning stages of an idea, think through how you’ll measure the idea’s results once you’ve shipped. Consider changing how you ship an idea if you’re creating unnecessary analysis work downstream.

For example, let’s say you’re thinking of driving Facebook traffic to a sign-up page you’ve already created for another campaign. Rather than mix Facebook traffic with that other traffic, consider cloning the page to a unique URL and directing the Facebook traffic to that new page instead. Mixing traffic makes analysis a little trickier, especially if you aren’t familiar with UTM parameters and segmenting reports.

Step 3: Assign ownership and stick notes on the timeline

If you have a marketing team, discuss ownership for each task with participating teammates. Teammates usually volunteer themselves, and the leader should know who is best-suited for which task. The teammate who owns the task should stick a note on the timeline and sign his or her name on the sticky note.

Step 4: Make sure the timeline is realistic

Let’s assume a 40-hour work week really has around 30 hours of actual work time for the tasks at hand. Maybe folks are pulled into meetings, emergencies, etc. I’ve worked with some hyper-productive teams that are able to squeeze closer to 40 hours of work out of each week. Great productivity is usually the result of smart team organization and stellar personal discipline.

As the leader, make sure no one is carrying an impossible task load for any particular week. On the flip side, make sure no one is carrying too small a load, either, because Parkinson’s Law states: “Work expands so as to fill the time available for its completion.”

Step 5: Keep a pulse on the team with daily stand-up meetings

We’re not naive. We know plans are rarely perfect. I keep a pulse on progress through my version of a stand-up meeting each morning. For a team of 6-8, it should last 5-10 minutes. We’ll stand up, gather ‘round, and take turns answering these 3 simple questions:

  1. What do you want to achieve today?
  2. What may be blocking you from achieving that?
  3. What help do you need?

Early on, your team will be tempted to go down a rabbit trail discussing something someone just said. The stand-up leader should notice that and quickly – and politely – say, “Excuse me, what if we discuss that afterward so Sally doesn’t have to wait for her turn?” Encourage teammates to resolve issues after stand-up so no one has to wait around listening to something irrelevant.

If you hear a teammate, in meeting after meeting, continue to say he or she wants to achieve the same thing, that’s a red flag. Either the teammate isn’t being specific enough (e.g., “I’m going to interview customers today” versus “I’m going to interview Bob, Sally, and Pat today.”) or the teammate is struggling to get things done.

The team leader needs to have a private 1-on-1 with that teammate and help improve the situation, fast. In 1-on-1s, I personally use many of the tools taught in the bestselling book, Crucial Confrontations, to resolve issues and encourage better performance.

Conclusion

Some people complain about how hard it is to keep up with modern marketing because of how new technologies like YouTube and Facebook keep popping up. That’s why I enjoy going back to the fundamentals. No matter what medium you use (be it YouTube, Facebook, snail mail, radio, etc.), this 4-phase marketing process will still apply. Feel free to experiment, and do stay in touch with your results.

About the Author: Nemo Chu was the first marketer at Bloomfire, which was acquired 20 months after launch for 7-figures. Then, he was the director of customer acquisition and success at KISSmetrics by day, while building a 7-figure ecommerce business in 12 months by night. He occasionally consults, coaches entrepreneurs 1-on-1, and he writes a free newsletter.

Some of the links in the post above are “affiliate links.” This means if you click on the link and purchase the item, we will receive an affiliate commission. Regardless, we only recommend products or services we believe will add value to our readers.

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