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?

I’m conducting some intensive training for the lead generators I manage and oversee, based on curriculum from appointment setting expert Scott Channell. I’ve broken the training into four distinct phases. Although this is specifically geared towards cold-calling, the steps in this process apply to any type of marketing you do.

The first step in the process is What to Say when you have a decision-maker’s attention. Whether that’s over the phone or on your web site, you’re going to have to plan in advance what you’re going to say. If you don’t have something very compelling to tell them, you will lose them. Without the right message, even the person who has a need for your product or service will tell you ‘no.’

Answering Objections and Responding to Resistance is phase 2. We hear the same objections over and over, so there’s no excuse not knowing how to respond to them, be it face-to-face or in your marketing material.

Phase 3 is implementing a Seven-Touch Call Process. This is where most sales people struggle… how often should I call? How many emails until it becomes spam? Unless you figure out how to consistently touch your prospects numerous times, you will become lost in the clutter.

Targeted Marketing is phase 4. Most businesses would love to clone their five or ten best customers, but few make the effort to try. Does it work? We’ve only done it to a small degree but we’ve seen some dramatic results

The final step is Creating a Killer Value Proposition. A value proposition is ”a clear statement of the tangible results a customer gets from using your products or services”. The best source for this information is from the mouths of your customers themselves. Once you know why they buy from you, weave that into all of your sales and marketing messages. Why did I save this step for last if it’s so important? Because you need to start marketing as best you can, as soon as you can – with or without a “killer” value proposition. Once your marketing machine is in motion, you can tweak it as you go.

I’ll be covering each of these steps in more detail over the next few days. Until then, happy marketing!

I’d like to think I’m a good boss, but I’m certain that at least a few of the people working for me hate me this week.

That’s because I’ve been subjecting them to some extensive training on setting sales appointments. The first step was to develop an effective script. Everyone worked hard coming up with a good one, and today we completed our final drafts. I gave everyone until Monday to make any last-minute tweaks and to practice, practice, practice before launch day.

But a few of the more rebellious ones decided to start using the new script right away. In the first hour after today’s meeting, 3 people set appointments with their new script; and one person used a portion of his to overcome an objection and book an appointment. Way to go, team!

Over the next few weeks, I’ll be sharing some of our techniques and strategies, successes and failures. Regardless of how you’re marketing, I think you’ll read something to help in your endeavors.

In my last post, I talked about how raising prices can actually bring you in more business, reduce your workload and make you more profitable. The reason is simple: raising prices drives away the cheapskate customers. And what’s left are the ones who spend the most.

Another way to accomplish this is to deliberately target customers who spend the most. The idea here is to clone your best customers.

I spoke with Scott Channell on this very topic last week. Scott is an author, speaker and sales consultant – and an expert on setting sales appointments. I’ve been getting his marketing emails and following his advice for the past few years. I was familiar with the concept of targeted marketing, but I never got around to it with my web business. So when I read Scott’s emails on the subject, I decided to try it with my telemarketing department.

I started off by looking at sales from the previous year, 2008, and identifying what types of businesses spent the most money with us. I gave the biggest spenders – attorneys – to my best appointment setter.

The results, shown in the graph below, were nothing short of dramatic. By the end of 2009, we had increased attorney sales by more than 660 percent over the previous year.




Looking at 2009, the next graph shows how dramatically attorney sales jumped in June when we began this strategy.




Targeted marketing works because it makes your efforts more effective. You can be super-efficient and make 150 calls a day. But if those 150 calls are random and non-targeted, your results will be less than stellar. Why not focus your efforts on calling those who buy more often and spend more? We did, and the results speak for themselves.

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:

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?

In this video, marketing consultant/author Simon Sinek gives a great presentation based, in part, on his book, Start with Why: How Great Leaders Inspire Everyone to Take Action. Whether you’re a salesperson, business owner, marketer or entrepreneur, there’s something for everyone here.

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:

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!

Studies show that businesses who maintain or increase their marketing during a recession experience higher sales growth – both during the recession and immediately following.

During a recession, money gets tight and fewer people are buying. If both you and your competitors continue to advertise, you wind up competing even harder for the few customers that are left.

That’s the bad news. The good news is that, even though there are fewer customers, there are also fewer companies marketing to them, because many of your competitors will cut back their advertising. Advertising during a recession gives you a unique opportunity to win their customers and gain market share.

Here’s an actual example from our nation’s worst economic downturn. In 1929, rival cereal makers Kellogg and Post fought to dominate the packaged cereal market. When the Great Depression hit, Post did the predictable thing – they cut back on advertising. But Kellogg doubled their advertising spending and aggressively marketed their new cereal, Rice Krispies. By 1933, as the economy tanked, Kellogg’s profits had risen by nearly 30 percent. By the end of the Great Depression, Kellogg was the dominant player – and remains so to this day. Post never regained what it lost.

Don’t Base Your Advertising Budget On Last Month’s Sales – Or Lack Thereof

A research study by McGraw Hill/American Business Press revealed that companies who maintained or increased their marketing and advertising during the 1981-82 recession experienced an average of 256% higher sales than their competitors who reduced their marketing over the same period.¹

What’s more, these sales figures continued for the next three years after the recession had ended!

A similar study conducted over same period by research firm Meldrum & Fewsmith concluded that aggressive advertising did not only grow revenues; it even increased profits.²

In 2001, a study comparing marketing practices during the 2001 recession determined that aggressive recession advertisers increased market share 2½ times the average compared to all businesses in the post-recession.

Missing The Boat For Fear Of Sinking It

When hard times hit, however, most companies behave more like Post than Kellogg. They batten “down the hatches” and wait for better times to return:

Uncertainty is always a part of business, but in a recession it dominates everything else: no one’s sure how long the downturn will last, how shoppers will react, whether we’ll go back to the way things were before or see permanent changes in consumer behavior. So it’s natural to focus on what you can control: minimizing losses and improving short-term results. And cutting spending is a good way of doing this…

- “Hanging Tough,” The New Yorker, Apr 2009

Unfortunately, you can become so focused on not “sinking the boat” by cutting spending that you end up “missing the boat” by not seeing the opportunities that a recession can bring – opportunities to:

• Experience higher-than-average sales
• Grow profits
• Increase market share
• Leap from the bottom of your industry to the top

Advertising during a recession provides a unique window of opportunity to…

...build equity, solidify your customer base, gain new customers; and make inroads on your competitors who have cut their advertising during the recession period. This window of opportunity is created by the understanding that advertising is an investment, not an expense.

- AllBusiness. “Advertising During A Recession,” Direct Marketing, Sep 1991

Do you have the nerve to try? Most companies don’t.

To paraphrase the Harvard Business Review³, If you’re courageous enough to stay in the fight when everyone else is playing it safe, you can bring about dramatic changes your market position. Your advertising should not be regarded as a drain on profits, but as a contributor to profits. It’s not an unavoidable expense – it’s a means of achieving your objectives.

At the risk of being redundant, I’ll say it again: Your advertising budget should always be based on your company’s goals, not last month’s sales.

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¹The McGraw-Hill Companies’ Laboratory of Performance Report 5262.1: “Business-to-Business Companies that Maintained or Increased Their Advertising Expenditures during the 1981-1982 Recessions Generated Higher Sales Growth than Firms which Eliminated or Decreased Advertising,” June, 1987.

²American Business Press, Inc. “How Advertising in Recession Periods Affects Sales,” ABP/Meldrum & Fewsmith Study, 1979.

³Dhalla, Nairman K. “Advertising as an Antirecession Tool,” Harvard Business Review, Jan/Feb 1980.