Small Business Marketing Sucks

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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.