Small Business Marketing Sucks

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.

Even during prosperous times, it’s suprising to hear this. Yet, even in an economic downturn, some customers will tell us, “I have more business than I can handle.” Some think that’s a good thing… while others are overwhelmed by it. When we tell them that they ought to “raise their prices,” we often receive a puzzled stare back in response.

The website FreelanceSwitch has posted a list of the “Top Ten Signs You May Be Charging Too Little.”

10. Your clients mistake your daily rate for an hourly one.

9. You’ve won every job you’ve ever bid on.

8. Even though you work 80-hour weeks, your income level qualifies you for welfare payments.

7. New clients are always asking what “the catch” is.

6. Clients pay your invoices in cash from their wallet.

(You can read the rest here.)

The Marketing Blogspot has an interesting and informative post on the concept behind how raising prices can actually bring you more business. The author says that most people believe that raising prices equals less business because fewer people will want to do business with them – when the exact opposite is actually true.

I read a great definition of capitalism recently:

A system in which there are winners and losers, in which someone with a brilliant idea gets rich, while most of us get by.

I think of Apple CEO Steve Jobs when I read that. He had several brilliant ideas (like the Macintosh, the iPod and Pixar, to name a few). He’s rich while I’m getting by.

Then there’s Facebook founder Mark Zuckerberg. I should have been Mark Zuckerberg. I was a web designer and my partner was a web developer. We could have created Facebook… we had the technology. But Mark Zuckerberg had the brilliant idea. He’s rich while I’m getting by.

Guy Kawasaki, one of my favorite speakers, encouraged a group of high school students to “challenge the known and embrace the unknown.” The story he shared is a telling example of innovation and the lack thereof:

In the late 1800s there was a thriving ice industry in the Northeast. Companies would cut blocks of ice from frozen lakes and ponds and sell them around the world. The largest single shipment was 200 tons that was shipped to India. 100 tons got there un-melted, but this was enough to make a profit.

These ice harvesters, however, were put out of business by companies that invented mechanical ice makers. It was no longer necessary to cut and ship ice because companies could make it in any city during any season.

These ice makers, however, were put out of business by refrigerator companies. If it was convenient to make ice at a manufacturing plant, imagine how much better it was to make ice and create cold storage in everyone’s home.

You would think that the ice harvesters would see the advantages of ice making and adopt this technology. However, all they could think about was the known: better saws, better storage, better transportation.

Then you would think that the ice makers would see the advantages of refrigerators and adopt this technology. The truth is that the ice harvesters couldn’t embrace the unknown and jump their curve to the next curve.

Challenge the known and embrace the unknown, or you’ll be like the ice harvester and ice makers.

This reminds me of the company I worked for in the mid-nineties. In the 1980’s, the company developed a large-format computer painting machine. At that time, all billboards were hand-painted, but this machine could produce signs faster, with greater consistency and with colors more vivid, than the best hand painters could. For the next ten years, they dominated the industry.

But by the late-nineties, advances in technology enabled other companies to develop large-format devices whose output began to first match, and then exceed, what the company's machines could do. So now anyone with some capital could buy a $20,000 large-format printer, produce a product superior to what the company’s multi-million dollar patented painting machines could, and sell it for much less… which they did. During the dark days of plummeting profits and subsequent lay-offs, one of the VP’s told me that they had gotten “fat and complacent.” They were in danger of becoming an ice harvester.

It also reminds me of the industry I’m currently in, the Yellow Page industry. In the mid-nineties, when companies like AT&T and Ameritech were enjoying high profits from their Yellow Page monopolies, two Stanford University students were quietly setting up shop in a garage in Menlo Park, CA. I’m sure that the multi-billion dollar telecommunications companies could never have imagined that this newly-formed company named Google, with its measly $100,000 of investment capital, would ultimately be poised to topple them as the preferred medium that consumers would use to search for local business information.

So what’s the lesson for the small or medium-sized business today? Never assume that the products and services you sell today are going to be the same ones you sell tomorrow. If you focus exclusively on the how and neglect what you do and why you do it, then you’ll find yourself in the same position. Yellow Pages have been extremely successful “connecting buyers with sellers,” but they were asleep at the wheel and didn’t see that the Internet could fulfill that role and be in position to eventually displace their print directories. With all of their capital and resources at their disposal, they could have been Google. They should have been.

In my previous post, Internet Marketing 101, I explained the difference between Search Engine Optimization (SEO) and Pay-Per-Click (PPC) advertising. (If you missed that, I suggest you read it first before continuing.) In Internet Marketing 102, I’ll explain the pros and cons of each to help you decide which might be best for you.

PPC Pros and Cons

Pay-Per Click (PPC) ads have the advantage of getting you instant ranking. You can create an ad today and be #1 on the search results tomorrow… provided you are willing to pay top-dollar for the search phrases you want. For this reason, many marketers use PPC to test a product. You can create a short campaign, set a limit on how much money you’re willing to spend, and quickly know if there’s an online market for your wares.

And here’s another tip for product testing. More people use Google than any other search engine. (Over 90 percent of all searches are done using Google.) That means that if you’re serious about selling online and determined that PPC is the way to go, then you’ll want to use Google’s PPC program, AdWords. But because of the high volume of traffic, Google can command top dollar for their cost-per-click prices. So smart marketers test their product on Yahoo! instead, because their prices are more affordable and their ad program simpler to use than Google’s.

Another advantage of PPC advertising is that it’s do-it-yourself. I say that somewhat reluctantly, however, because in Google’s world, “do-it-yourself” doesn’t mean easy. One expert describes it as “not rocket science… but darn close.”

The only reason PPC is remotely do-it-yourself is because Google offers an extensive (and free) online training course to help you learn their AdWords program. (In case you were wondering, they don’t offer one for SEO, because they want to sell advertising, after all.) And while SEO may not be rocket science, it is computer science – and Internet marketing savvy, all rolled into one.

The disadvantage of PPC is that you’ll be bidding against similar companies for the search phrases, or “keywords,” you want… and the highest bid gets the best ranking. In a highly-competitive field, such as weight loss or work-at-home jobs, the cost of your keywords may simply be too high for you to see a return on your investment. Compounding this is that, if you jump in without really taking the time to learn how it works, it’s easy to lose your shirt.

SEO Pros and Cons

If the main advantage of PPC is instant ranking, then the biggest disadvantage of SEO is that it takes a long time – too long, in fact, if you’re testing a new product for marketability. Achieving top ranking in the natural results can take several months. But the good news is, once you’ve gotten a top ranking, it cost much less to keep you there than it did to get you there. Here’s where one of SEO’s main disadvantages – its initial high cost – becomes an advantage if you’re in it for the long haul.

SEO has a much higher cost to get started – anywhere from $5,000 to $8,000 in your first year. But most experts will tell you that SEO is cheaper in the long run. Here’s why.

With PPC advertising, your costs will never decrease. In fact, they may increase as your keywords become more competitive. But that’s not the case with SEO. Most SEO companies charge an initial $2,000 - $4,000 to do keyword research and optimize your site’s code, structure and content. This is Phase 1.

Phase 2 is getting your site to begin to climb the long ladder to top ranking. To make this happen, a good SEO specialist will do things like write press releases and articles or create videos and distribute them on various sites across the web. They will also look for ways to get top sites to link back to yours. These help to improve your Page Rank. This phase may cost $300 or $400 a month for 6 to 8 months.

But once you get top ranking, they may only charge $150 a month to keep you there. So your first year investment may total more than $6,000, but Year 2 may cost you less than $2,000. And if your total online sales gross a quarter-million a year… well, you do the math.

I once met with the owner of a casket manufacturing company who was very successful selling caskets online with PPC advertising. But they were spending several hundred dollars a week to do so. In the scheme of things, even if they were spending $20,000 or $30,000 a year for PPC, they were still getting a return on investment. But if they could invest in SEO and ultimately reduce that to $2,000 a year, why wouldn’t they? (Which is why they were talking to me.)

That brings up another advantage of SEO. More people look at (and click on) the natural search results than the paid ads. So ranking high there may drive in more business over the long run than PPC.

To recap, PPC is great for achieving instant ranking and is more do-it-yourself than SEO, but it’s easy to lose your shirt if you don’t know what you’re doing. SEO takes longer and has a higher up-front cost, but is usually less expensive in the long run. But it’s much harder to learn than PPC, so it usually requires hiring an expert to do it for you.

But PPC vs. SEO is not always an either/or proposition. Many successful companies use both. The key is to measure and monitor both to be sure you’re seeing a return from each.

My dad has been experimenting with search engine marketing and Google AdWords. The other day, he called me with a question. He wanted to know how to create an ad that would appear on Google…not the top or right section where the paid ads appear, but in the main center portion of the page.

Dad was confused; he was trying to do something that’s not even possible. Most small business owners are equally confused about search engine marketing. A recent survey revealed that the majority of small business owners feel that Internet marketing is very important. Yet, 59 percent of small businesses with web sites don’t use paid search marketing... and of those, 90 percent have never even attempted it! So if you want to know more about search engine marketing, but you don’t know a PPC from a SERP, you’ve come to the right place. Here’s my Internet Marketing 101 Primer.

(I’m going to use Google in my example, because they are currently the 1000 lb. Internet marketing gorilla. But the information here applies to all search engines.)

When you type in a search phrase in the search box, Google serves up several pages of results. This is called the Search Engine Results Page, or SERP. (There’s one acronym down.) The search results come in two varieties, paid and natural, and they appear on different parts on the page.

Paid Search Results

The search results at the very top and on the right are paid ads, as shown below:



These are called Pay-Per-Click (PPC) ads because the advertisers pay Google money each time their ad is clicked on. The advertiser who is willing to pay the most for a particular search term (such as “fishing lures” in my example) is the one who will appear at the top.

Natural Search Results

The search results that appear on the main body of the page are not ads. These are called the “natural” or “organic” results.


Where my dad got confused is that, appearing under each website listed in the natural search results, there is a short description, which looks similar to the paid ads on the right. But this description is not a paid ad… it’s a snippet of code that Google and other search engines pull from the HTML code of the website:


As I said, these are not ads. You cannot pay Google to appear in the natural search results. Google’s complex (and highly secret) mathematical algorithms determine who gets well-ranked and who doesn’t.

To achieve a top ranking (especially in a highly competitive field), you must either be very smart, or you must hire someone who is very smart to do it for you. These very smart people are known as Search Engine Optimization (SEO) specialists. Part art and part science, Search Engine Optimization is the process of making a website’s code, structure and content as “search engine friendly” as possible in order to get the search engines to rank it as high as possible on the Search Engine Results Page (SERP).

When I ran my web business, I helped clients get good search engine ranking by sub-contracting the services of these very smart SEO people. But in order to explain the benefits and pitfalls, I also had to be able to talk about it in non-technical terms. Here’s as non-technical as it gets: search engine marketing is only successful if you get a return on your investment.

Some companies choose to exclusively use Google’s Pay-Per Click to sell their products online. Others use search engine optimization. And still others use both. What you choose to do depends on many factors, and each one has its advantages and disadvantages. So it’s not a question of which is best, but which is best for you. In my next post, I’ll outline the pros and cons of each to help point you the right direction.

You’ve probably heard the saying, “It’s not what you say, it’s how you say it.” As a telemarketing manager, it used to baffle me how two telemarketers could deliver the exact same pitch and yet one would set five times more appointments than the other. I’ve come to believe that how we say it is at least as important as what we say.

The reason for this lies in the physiology of the brain, so here’s some Science 101. But don’t worry… I’ll keep it simple.

Your brain is made up of many parts, but for our purposes, I’m only going to talk about two. The first is the outer portion, or the neocortex.

The neocortex is our “Thinking Brain.” It’s primarily responsible for things like:

• Rational thought, Logic and Language
• Reasoning and Problem solving
• Judgment and Impulse control

The other portion is the limbic brain. This is our “Feeling Brain.” The limbic brain is the first part of our brain to react to anything we see, hear, feel, etc. In other words, the first response we have to any situation or event in an emotional one… because all sensory input hits the limbic brain before the neocortex. This means we feel before we think.

Now that you know a thing or two about the brain, which part do you suppose controls decision-making?

Is that your final answer?

If you picked the limbic “feeling brain,” then you answered correctly.

Does it surprise you that the feeling brain is what drives decision-making rather then the thinking brain? It doesn’t if you’re in sales, because you’re probably familiar with this well-know quote:

“People usually buy on emotion and then they justify it with logic.”

- Zig Ziglar

Science is now confirming what salespeople have known for years – and the physiology of the brain explains why it is so.

This means that, as sales people, business owners and marketers, if we want to persuade and influence others’ decisions, we must communicate to the feeling portion of the brain more than the thinking portion. It’s not that people don’t want logic, facts and figures when making decisions – they do. It’s just that logic doesn’t drive behavior and cause people to take action… emotions do.

Need more proof? Let me channel Cliff Clavin for a moment. The word emotion comes from the Latin word emovere. Here’s a word picture:

emovere

It’s also where we get the word motivation. The bottom line is, we don’t move or make any decision unless our emotions are involved.

So what does this have to do with using your voice more effectively? Well, everything… because the limbic “feeling brain” also processes vocal intonations or “tone of voice.” This means that your tone of voice is the direct link to the “emotional mixing board” in another person’s brain. Your tone of voice has a huge impact on the other person’s emotional response – for better or for worse…

In a SpongeBob SquarePants episode, Mr. Krabs sees a group of tourists outside his restaurant, the Krusty Krab. With dollar signs in his eyes, he hurries out to entice them inside. As they scurry past, he shouts:

“Don’t you want to give me your money?”

Needless to say, they continue on without giving him so much as a moment’s notice.

Whether it’s busy tourists or busy decision makers, no one cares about what you want or what you’re selling. That’s where a strong value proposition comes to the rescue. Jill Konrath, author of Selling to Big Companies, defines a value proposition as:

...a clear statement about the tangible business results customers get from using your product, service or solution.

She goes on to say that a strong value proposition “always includes movement,” and describes that as:

increase	cut	improve	save	free up	revitalize
accelerate	reduce	enhance	squeeze	eliminate	shrink
strengthen	improve	grow	balance	minimize	maximize

So what types of things can you increase, enhance, shrink, improve or revitalize? That depends on what you’re selling, and to whom. Since my company sells advertising, we can increase, improve, strengthen and grow things like:

• revenue, profit, sales
• prospects, leads, customers
• customer base, market share
• return on advertising investment

So a “winning value proposition” for us could be:

We help businesses acquire new customers and increase their market share, without wasting money on advertising that doesn’t work.

Once you’ve created a strong value proposition, use it in your phone calls, emails and voice mails, in your print and web copy, and at your networking meetings. Go ahead, you give it a try.