Small Business Marketing Sucks

In my latest SitePoint blog post, I talked about inbound vs. outbound marketing. In case the difference isn’t clear to you, here’s a quick definition of inbound marketing:

A marketing strategy that focuses on getting found by customers, where the customers find you through various search engine marketing efforts, social media, or word-of-mouth referrals.

Outbound or traditional marketing would be things like print advertising, direct mail, cold-calling, and television and radio advertising – essentially, anything a company does to find customers, as opposed to “being found.”

It’s become quite vogue to characterize outbound marketing as “old school.” But is traditional marketing really as dead or ineffective as inbound marketers claim?

It sounds good in theory to say the every business should utilize inbound marketing. But how would you advise someone who just opened his own carpet cleaning business? Build a website and hope people find it? Create a Facebook page or Twitter account and look for people to ‘like’ it or follow him? Blog about carpet cleaning? Honestly, how many homeowners would engage a carpet cleaning service on social media? Besides, it’s the cart before the horse.

The best strategy would be a combination of old school: Yellow Page advertising, direct mail and cold-calling. That’s what will get him customers right away. Once he’s built up a sufficient client base, then he can begin using social media to engage them, offer discounts and incentives, and generate marketing gravity.

Many people think that outbound marketing more expensive than inbound. But how much does cold-calling cost compared to search engine optimization or paid search? (You’ll spend a lot less on the phone calls.) Certain keywords are becoming quite expensive and ROI is dropping because only large companies with huge marketing budgets can afford them.

Another thing that’s dropping is the cost of Yellow Page advertising (due to independent directories entering the field). In some markets you can buy display advertising for less than $1200 for the entire year.

For most (if not all) small businesses, a combination of inbound and outbound marketing may be the best option. I owned my own web business, so you’d think I’d be singing along with the “outbound only” marketing tune. But my experience has shown me that those who preach that message usually have their own agenda – to sell their own inbound marketing services. And what better way to accomplish that than to disparage their “outbound” competition?

Technology is wonderful… except, of course, when it’s not. Like when my parents have something “really important” to tell us... and they call our house phone, my cell phone and my wife’s cell phone… all in a matter of minutes. (We love you, Mom and Dad, really.)

Or like the time the scoutmaster needed a permission slip for my son’s upcoming campout. He sent me a private Facebook message. Unfortunately, I hadn’t been on Facebook for several days and showed up to the meeting without the slip.

New technologies often replace older technologies. (Do you remember floppy discs? No, neither do I.) But oftentimes, new technologies merely supplement an existing one. Friends and family now have several options to communicate with me: They can call my cell phone or my landline, email me, text me, send me a private Facebook message, or post something on my Facebook wall.

It’s no different in the business world. No one is disconnecting their fax or phone line because they now have corporate email. But many companies have decided to stop all their traditional advertising because of this thing called “The Internet.” But is that really the wisest thing to do?

Recently, I needed a new printer, so I began looking at the wireless all-in-one printer/scanner/copiers on the market. My hot button was the high ink cost and the fact that most printer manufacturers combine the cyan, magenta and yellow ink into a single cartridge, forcing me to throw it out when only one color runs out. So I wanted one with four separate ink cartridges and a low cost-per-page.

I decided to research the two brands I’m most familiar with – Epson and H.P. After doing several searches on both brands and discovering that there are far too many printer models (and even more consumer opinions on each of them), I needed a YouTube break. As I’m watching a favorite video, suddenly an inkjet printer ad pops up at the bottom. Coincidence? I think not.

Later that night, a television commercial for Lexmark inkjet printers interrupts my regularly-scheduled viewing. Lexmark, it seems, claims to be one of the most ink-efficient printers on the market. So off to my computer I go for more research.

What finally completed the buying cycle for me was CNET, where I read both professional and consumer reviews on the various printer models. Yes, I did all my research online (and even made my purchase online), but it was good ol’ fashioned television advertising that got me to buy a brand I wasn’t even considering.

Advertising channels are becoming more and more fragmented, so it’s no longer possible to reach a mass market. Smart marketers are taking advantage of every advertising channel that will generate a lead. And something it takes all of them working together to generate a single sale.

As I said before, your all of your marketing should work together as a team. Pick the best players (i.e., advertising mediums and marketing methods) for your type of business, then work them to generate that one sale. And then the next one. And so on...

That was an actual response heard by one of my appointment setters.

Why is it that no one says things like, “I'll pay my phone bill again when business picks up,” or “I’ll pay my electric bill once business picks up”? How do you expect business to “pick up” if you don’t advertise?

I’ve said it before and I’ll say it again: A recession is the best time to advertise, because most of your competition is cutting back on theirs.

It’s the perfect opportunity to steal their customers.

You see, the average business owner tends to think that, in a recession, no one is buying; so if no one’s buying, why advertise?

That would make sense, if it were true. But the reality is, people are buying, you’re just competing for a smaller pool of buyers. (In fact, a recent study shows that 24 percent of consumers made only minor cutbacks to their spending during this economic downturn.) Only the businesses that continue to advertise will have access to the larger percentage of consumers that did adjust their spending habits.

Since you need to compete even harder for customers, don’t just keep doing what you’ve been doing – otherwise, you’ll just get more of the same. Instead, figure out what will get customers to buy from you. Just advertising in itself will not do the trick. You’ve got to advertise better. In a recession, consumers become more value-oriented. So what can you do to create more value for your customers, so that they’ll remain loyal customers?

For example, in a recession, over 80 percent of consumers surveyed say they think it’s a smart idea to pay for everything with cash, debit cards, and checks. So how about offering a discount to these customers?

That’s just one idea. The important thing you need to know is, how does the consumer’s buying habits change when the economy is down? That knowledge is power.. but only if you act on it.

Need somewhere to start? The folks at mNovack Design have written a book “to inspire intelligent recessionary marketing.” You can order a free copy, or download the pdf.

Anyone who’s read a business book or gone to college should know ROI is a number derived from a simple mathematical formula.

Ian Sohn over at Flagged For Follow Up made that statement on a blog post about ROI. He’s absolutely right. Here’s a simple mathematical formula:

1. How much revenue do you want your advertising to generate each month?
    Pick a realistic number. In my hypothetical example, I’ll use...

      $5,000

2. What is your average sale?
    If you have multiple products, think about what your average customer spends.

      $1,000

3. [Now divide $1,000 into $5,000.] The number of sales you need is:

      5 sales

4. How many prospects must you speak with to make 1 sale?

      6 prospects

5. [Now multiply 5 sales x 6 prospects.] The number of calls you need is:

      35 calls

So to sum it up, 35 calls a month would result in 5 sales and bring in $5,000 a month.

This is an example of what a transmission shop could expect from Yellow Page advertising.

Remember in my previous post that I said you could get significant advertising in many independent directories for less than $3,000 a year? Spending $3,000 a year to get $5,000 a month x 12 (i.e., $60,000) is a 20:1 return on your investment.

And they say Yellow Page advertising doesn’t work...

I’ve been told by older reps how sweet it was to sell Yellow Page advertising “back in the day” (that being when phone companies had a monopoly on Yellow Pages). They tell me the typical sales pitch went something like this:

I’m here to sell you Yellow Page advertising. Oh, you’re not interested? Well, you will be. Here’s my card; call me when you change your mind. Oh... and the book’s closing in 2 weeks.

That’s how first half of their day was spent. The second half usually involved golf...

Those days are gone forever, mainly because the deregulation of the Telecom industry allowed for smaller, independent Yellow Page companies to publish directories of their own. Competition has forced rates to come down. As a result, companies like AT&T and Verizon can no longer charge the exorbitant prices they once did. And the independent publishers’ rates are even more affordable. (You could spend less than $3,000 and get display advertising in multiple headings for an entire year.)

Of course, any advertising is “too expensive” if it doesn’t work. And by “doesn’t work” I mean that you paid more money for your advertising than you got back in return.

So any discussion of advertising must include Return on Investment. And that’s the topic of my next post.

I just read an interesting analysis [pdf] of the “Get a Mac” ad campaign... you know, the ones with the nerdy businessman (“I’m a PC”) and the cool hipster (“I’m a Mac”) politely bantering about which is superior.

The long-running commercials have won advertising awards, been praised by Mac users, denegrated by PC loyalists, and parodied numerous times on sites like YouTube. There's even a website where you can watch all 60+ commercials.

But the ultimate success of any advertising campaign is, How much did it affect sales? Here are the results:

• 2006: Apple’s overall sales rose 39 percent for the fiscal year. (That rise began shortly after the first commercials began to air.)
• 2007: Apple reported 34 percent growth in Mac sales from 4Q 2006.
• 2008: Apple saw 38 percent growth in Mac sales from the previous year.

So what can the average business owner take away from Apple’s success? There are many factors that make a campaign successful, but here are three key components to consider in all your advertising:

Know Who Your Target Audience Is

Apple knew their intended audience... and it wasn’t the staunch PC user. (In fact, most of the backlash over the campaign came from this camp.) No, their target audience was the “swing” consumer who was not entrenched in either camp. These may have been people who didn’t actively choose a PC over a Mac, rather, those who bought a PC because they didn’t know what else to get.

Facts Tell, But Emotions Sell

Apple clearly understands that facts, features (or even benefits) don’t sell... emotions do. The report noted that, if you were to distill the central theme that runs across the entire campaign, it would be:

...PCs cause trouble and grief — they’re hard to use, they’re unstable, and they’re vulnerable to malware. Macs are easy, stable, safe, and competent. Your computer problems will go away when you switch to Mac.

Words like trouble, grief, hard, easy, stable, safe and competent are all emotional; and even though the commercials didn’t directly say these things, they were certainly the message they intended to convey.

Marketing Matters!

You can reap the benefits of advertising, or suffer the consequences of not. Apple has done both.

What prompted the “Get a Mac” campaign was, in spite of consistent growth since 2001, Mac sales went south in late ‘05. In May ‘06, Apple launched the “Get a Mac” campaign. In June, sales began their upward spike. Coincidence? I think not.

You may have noticed that I didn’t post Apple’s results for 2009. In September ‘08, Microsoft launched their “I’m a PC” commercials, and shortly thereafter, Apple’s “Get a Mac” ads largely disappeared. In early ‘09, Apple’s double-digit growth in Mac sales took a sharp decline. Coincidence? Again, I think not.

Blogging on this same topic,eWeek’s Microsoft Watch summed it up nicely:

What have I been saying for months? Marketing matters. People buy products that they see advertised. Their awareness increases, as does potential emotional connection to a brand and/or product. During the worst days of Windows Vista sales, Microsoft did no marketing. But since September, Microsoft has consistently advertised Windows and supporting software, like Windows Live Photo Gallery.

The bottom line: regardless of what advertising medium you employ, all the key ingredients must be included in order to succeed.

Apple has offically announced that it’s ending the “Get a Mac” campaign but considering it’s overall success at embedding itself into pop culture, I’m sure its legacy will continue. With that thought, I’ll close with one of my favorites:

As the image above illustrates, consumer behavior towards any particular medium is what makes it a valuable advertising channel. For newspaper and magazines, it’s the number of people who have subscribed to the publication. For outdoor advertising, it’s the number of cars driving past a particular location each day. For television and radio, it’s their ratings. For a website, it’s the number of visits, or unique visits, each month.

Yellow Pages are no different. Yellow Page publishers create directories with useful content in order to get consumers to use it. The more people who use the directory, the better it is for its advertisers. Why advertise in a book that only 5 percent of shoppers use, verses one that 30, 50, or even 75 percent use?

Yet, there is one critical difference that distinguishes Yellow Pages from nearly all other forms of advertising.

Television, radio, direct mail, outdoor, newspaper ads, and banner ads all have one thing in common – they interrupt the consumer when they are doing something else:

• Television/radio interrupts you while you are watching or listening to the program
• Direct (i.e., junk) mail interrupts you while you are sorting through your mail for bills
• Outdoor interrupts you while you are driving
• Newspaper ads interrupt your while you’re reading the latest news.
• Banner ads interrupt you while you’re surfing the web

Here’s what sets Yellow Pages apart: when someone is looking in the phone book, they aren’t doing anything else. Yellow Pages ads get one hundred percent of the consumer’s attention. That’s because the consumer has become a buyer who’s now looking for a seller, instead of the other way around.

Most other types of advertising have a very low response rate because only a small percentage of people who see or hear your advertisement are ready to buy at that moment. Unlike Yellow Pages, you, the seller, are looking for a buyer. This type of advertising reaches the vast majority of consumers at the wrong time.

90 percent of those that pick up the Yellow Pages are planning to make a purchase. Yellow Pages are unique because its users are buyers who are seeking a seller, instead of the other way around.

Because Yellow Page shoppers are further along in the buying process, Yellow Page ads have a high response rate. More than 80 percent of its users will make contact after referencing the Yellow Pages.¹ Of these:

• 93 percent will make a phone call
• 31 percent will show up in person
• 10 percent will go online
• 1 percent will get in touch by mail

Yellow Pages shoppers also close higher. Over 40 percent will make a purchase after looking in the Yellow Pages.¹ And over 90 percent of those will buy from same merchant seen in the Yellow Pages.¹

That’s not to say other types of advertising are inferior or ineffective. Every type of advertising has its inherent strengths and weaknesses – and Yellow Pages is no exception. Its primary weaknesses is that it’s a passive medium – it does nothing to spur your customer to action. It only provides the means of finding you once he or she does decide to act.

But... Yellow Pages can make your other advertising even more effective, because it provides a place for consumers to go after they’ve seen or heard your advertisement. So, two weeks later, when they realize they need you, they go to the Yellow Pages to look you up…

…but it they can’t find you, then your advertising has led them straight to your competitors, hasn’t it?

You see, your other advertising is great for targeting consumers and creating need, but how much more targeted can you get than “ready to buy”?

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¹ Knowledge Network/Statistical Research Inc (KN/SRI). One of the top 25 media research firms in the U.S., with numerous Fortune 500 clients, including all of the major radio and television networks, Yellow Pages publishers and ad agencies.

It’s become an online hobby for many marketing “gurus” to diparage Yellow Pages as “antiquated” and “obsolete.” They say things like, “Who uses the Yellow Pages anymore, anyway?” or they criticize the research studies yet never provide any data of their own to prove their point.

In reality, all studies are done by independent media firms (much like the Nielsen ratings do with television). So in the interest of the truth, I present to you a joint study, conducted by two such firms, Burke and comScore, which found the following about Yellow Page usage:

• In total, consumers referenced print Yellow Pages 12 billion times in 2009. (The average consumer turns to the Yellow Pages about once per week.)
 
• When looking for local business information, 65 percent of consumers go to print and/or Internet Yellow Pages, while 58 percent use a search engine. (Flyers/coupons were 38 percent, newspapers were 33 percent, and magazines were 14 percent.)
• The study also found that consumers have a greater trust in Yellow Pages compared to other sources. More than two-thirds (67 percent) said that print or Internet Yellow Pages is the source they trust most for finding local business information, compared to 33 percent for search engines.

A separate study [pdf] revealed that, of the total leads generated by an average Yellow Pages print ad, 44 percent come from consumers visiting the advertiser’s website after seeing the ad; while 56 percent come from phone calls. This means that advertisers who decide to cancel their Yellow Pages because of “lack of phone calls” are actual losing more leads than they realize. The study went on to say:

The study, which revealed the extent to which Yellow Pages users visit a business’s web site after reviewing their print ad data, suggests that leads from traditional print media are being underestimated and that traditional print media remains a reasonably effective way to drive people online and convert them into leads.

In this new digital age of satellite radio, cable TV, mobile and Internet, advertising channels have become more and more fragmented, and there is no one “silver bullet” when it comes to maketing. When looking for ways to drive in additional revenue, the objective marketer will evaluate all the available options. Don’t be too quick to dismiss Yellow Page advertising as “old school.” The research proves otherwise.

I’m conducting sales training all week, and one of my students showed me this video:



The Jerk came out in 1979. Since then, however, people have become skeptical about how effective Yellow Page advertising really is:

...most of these books are a complete waste, likely only to be thrown out (if touched at all)

...local search is making Yellow Pages obsolete...

...phonebooks are obsolete. Seriously, when is the last time you used one?

Should you still include Yellow Pages as part of your advertsing mix? Or have they become fossil fuel? Stay tuned... I’m about to answer that question in a series of upcoming posts.

Sales and marketing gurus are always talking about value — that in order to have a successful product or service, we must “create value” for the customer. But what exactly does that mean?

While the theory is absolutely correct, the concept of value is subjective and nebulous. What is valuable to one person may be completely irrelevant to another.

And to complicate things even more, we tend to be myopic about what we think is valuable about our product or service. It’s like trying to read the label from inside the bottle... what we think is valuable and ought to cause consumers to buy is often not the case. So it would seem that determining what’s valuable to your customer is not as easy as it sounds.

Here’s a simple definition:

If you are increasing or decreasing something that your customer wants increased or decreased, then you are creating value.

So... what value are you creating today?

Over the years, I’ve participated in a number of online forums, where business owners gather to discuss various issues that affect them. On one such forum, someone who had just started a carpet cleaning business posted this question: “What’s the best way to get new business?” The answers that followed were typical, if not predictable:

• The web designer said, “Get a website.”
• The direct mail guy said, “Send out some postcards.”
• The newspaper guy said, “Take out a classified ad.”
• The promotional items guy said, “Get some pens and fridge magnets made.”
• The yellow pages guy said, “Take out an ad in the Yellow Pages.”

And on it went...

Instead of searching for the one “magic bullet,” think of your advertising mix as a “team.” By adding members to the team, you can accomplish more than just one member could by himself. This is the best way to improve the response you get from your marketing.

Direct mail, for instance, has a typical response rate of 1-3%; but you can dramatically improve that by adding telemarketing to your direct mail campaign. A rescue mission that combined telemarketing with their direct mail fundraising got a 28% higher response rate from the group that received both a phone call and a mailer than from the group that received only the phone call.

In the same manner, Yellow Pages extends the reach of other advertising – Internet, radio and television by 22%, newspapers by 19%, and magazines by 23%. That’s because, once a consumer has seen or heard your other advertising, he or she still needs to find you. And one place they look is for you is in the phone book.

To put together a strong “team,” Gill Wagner, author of Honest Selling, recommends you choose “at least three marketing activities that you believe will produce your best results.” Some of the things he recommends considering are:

• Cold-calling to set sales appointments
• Conducting research projects and writing case studies
• Conducting workshops
• Creating lead-sharing groups or strategic partnerships
• Creating your own website
• Helping community, government, charities or nonprofit organizations
• Hosting exhibits at trade shows
• Mailing items of interest to clients and prospects
• Networking at business gatherings, association meetings and community functions
• Offering interviews to newspapers, magazines and radio or television programs
• Providing free advice on your website or through list-server participation
• Sending direct mail
• Serving on trade association or community boards of directors
• Speaking at trade associations and conferences
• Writing a book or books
• Writing a company newsletter and/or e-newsletter
• Writing articles for publication in relevant periodicals
• Writing cold-letters to targeted markets

My advice to the carpet cleaning guy? (Despite the fact the I owned a web design business at the time, I did not recommend that he “get a website” as a means to immediately find new customers.) My advice was a combination of Yellow Pages, direct mail and, if he had the nerve, cold calling.

If you’ve just started a business and need help marketing, I’d recommend you read the follow books:

Everyone in business want to decrease their costs, so here are three sure-fire ways to reducing your advertising costs:

1. Increase your close ratio
2. Increase your response rate
3. Decrease your cost per month

In my previous post, we looked at two ficticious business owners and compared how the cost of their advertising stacked up against these three factors. Let’s see how Advertiser A would fare by improving in these three areas.

Increase Your Close Ratio

If Advertiser A could close two people a month, instead of just one, he would more than double his return on investment and cut his cost-per-sale in half. (Although this doesn’t involve increasing the cost of your adverting, it may require spending money on sales training for yourself or your sales staff.)

Increase Your Response Rate

Even if Advertiser A’s close ratio remained the same, he could achieve the same results as above by doubling his response rate. If six people a month called instead of just three, he’d close two sales a month, increasing his return and cutting his cost-per-sale.

What most businesspeople don’t want to hear is this: the only way to increase your response rate is to increase your advertising. For direct mail, that might mean a larger mailing. On the Internet, it would mean achieving a higher ranking on the search engines. For yellow pages advertising, it means a larger ad. We know from independent research that just doubling the size of a quarter-column ad produces 5 times the response, and quadrupling its size produces 15 times the response.

Decrease Your Monthly Cost

Many people who want to decrease their advertising costs do so by decreasing their advertising. Unfortunately, this is the only method that negatively affects your bottom line, because it decreases your response rate and ultimately, your sales.

If you are doing any sort of advertising then each month, year or whenever it’s time for the next campaign, you are faced with a choice: continue with what you were doing, increase your advertising, or decrease/cut your advertising. When it comes to reducing costs, most people naturally focus on the actual cost of the thing, but you don’t cancel your phone service simply because your telecom costs are too high. You might consider a reduced service plan, but not without taking into account exactly how that might negatively affect your business, right?

Advertising is no different. The goal of marketing is to get responses and ultimately sales. So you cannot look at your advertising costs outside of the context of: (1) What your current advertising produces in terms of responses and sales, and (2) What the potential negative effects of reducing that advertising would be.

Most people decide to cut advertising because they believe or perceive that it’s not working. Assuming that’s not the case with you, here’s how to make the most from your advertising dollars.

Let’s imagine that business has taken a downturn, so you’ve decided to increase your advertising. If you’re going to spend more money on advertising, the increase must justify its cost by producing better results. This means that the basis for measuring the cost of your advertising must never be cost per month. Instead, it must be a results-oriented measurement, such as cost-per-sale and return on investment.

Return on Investment (ROI)

The first factor you must consider for any type of advertising is Return on Investment – will my return exceed its cost?

Advertiser A pays $25 a month for a bold listing in the Yellow Pages and gets an average response rate of about 3 people a month. Since he closes an average of 1 out of 3 calls, his advertising results in 1 sale a month. His average sale is $100, so by deducting the $25 cost of his advertising we see he’s made $75 from his bold listing.

Advertiser B has a Yellow Page display ad for which he pays $150 a month. Advertiser B also closes 1 out of 3 calls, with an average sale of $100. But the monthly response rate from his larger ad is 30 people, resulting in 10 sales. So when we deduct his monthly advertising cost from $1,000 in sales, he makes $850 a month.

Since both are getting a positive return on their investment, each adverting program could be considered a success. But would it surprise you to know that, although Advertiser A’s cost per month is less than B’s, his advertising is actually more expensive? Here’s why:

Cost-Per-Sale (CPS)

We said that Advertiser A’s bold listing results in 1 sale a month. This means that the cost-per-sale is $25. (One sale a month, for which he pays $25 a month.)

Advertiser B, however, is receiving 10 sales a month, for which he pays $150, so his cost-per-sale is only $15. Although both are getting a positive return on their investment, Advertiser A’s ad is more expensive, because he’s paying $10 more per sale than Advertiser B, even though he’s paying less per month. Make sense?

Remember: Cost-per-Sale and Return on Investment are the true measurement of what your advertising costing you – not cost per month!