Tag Archive for: fix your marketing

It is difficult to track whether the money we spend on passive promotional techniques such as advertising and direct marketing actually results in revenue, let alone profit. So advertisers and direct marketers focus on tracking “activity”, which doesn’t necessarily have anything to do with profit.

A few weeks ago I had an SEO company try to sell me on spending $400 per month by showing me higher click-through activity after clients had begun using their services. The problem is that activity doesn’t equate with profit.

A real estate broker had developed a software system that generated lots of leads from the internet – activity. The broker found though, that they spent most of their time chasing these leads with almost no effect. He ended up making a business out of selling all these leads to other real estate agents so they could waste their time chasing them. Activity may make us feel good, but it does not equate with results or profit.

I met a plumber who was spending $40,000 per year on the Yellow Pages and was very proud that he could track $400,000 in annual revenue directly back to that advertising. But when we analyzed it closely, we found that his profit on $400k was $32K. He was losing $8k a year for the privilege of doing $400k worth of work.

We are also told that we should spend money to “brand” ourselves, which lets advertisers off the hook for any kind of measurable result at all. It takes an enormous amount of money to make any kind of dent for branding or recognition advertising. Most small companies would be wasting their money trying.

What should we measure?

1. Go back and look at every client over the last year and ask where they came from. If you don’t track this kind of information, start. It is the most valuable marketing information you will get, and it’s free.

One local retailer found that the majority of customers came from shoppers already in the area. The problem was the store couldn’t be seen from the road and all these were simply from the parking lot. They got someone to stand out by the road with a swivel sign and increased their traffic even more. Passive advertising wouldn’t have been nearly so cost-effective.

If you’re not a drive-by retailer, you’ll find the majority of your clients come from referrals given to you by other clients or people you know. That should radically change they way you do marketing (spend Time, not Money, and get to know your clients and friends better.)

2. If you still feel advertising and direct marketing is a good spend, always have an ROI (return-on-investment) vehicle as part of the ad – 10% off with this coupon, or buy 3, get one free with this coupon, etc. – to help you with tracking. If you can’t always include such a response vehicle, fall back on #1 above to make sure you’re spending your money wisely. One service provider client of ours knows to the dollar how much business they get from the four different advertising mediums they use, and they adjust their spend accordingly every quarter.

In short, stop measuring ACTIVITY as if that justifies your advertising or marketing expenditure. If you can’t measure PROFIT related to EXPENSE, why would you make the expense?

It’s amazing how business owners, who would never spend $5,000 at the black jack tables, are more than willing to dump $5,000 into the black hole of advertising on the basis of the “Random Hope” strategy – “I sure hope this works.”

Stop marketing expense risks, know your numbers, and tie your expenditures to PROFIT, not to ACTIVITY. You’ll go home with more money.

You’re playing by the wrong rules and relying on Passive Marketing. It doesn’t work.

I host a No-nonsense Business Leader’s Insight lunch workshop every Tuesday. About once a quarter I’ll ask the following question regarding the four ways we market ourselves, and have every one of the 40+ attendees answer – “Where do you get the overwhelming majority of your new clients – 1) Advertising, 2) Direct Marketing (including cold calls), 3) Public Relations, or 4) Existing Relationships? I asked it again last week – there were 44 votes for “Existing Relationships” and one “Public Relations”.

And yet where is the focus of our marketing budgets? We have a fetish with advertising and direct marketing that is out of proportion to the reality of the results. Why? Because we have been taught by big business to do our marketing their way, by their rules – a way we can’t support or compete with – spend wads of cash on advertising and direct marketing, sit back, and watch the customers roll in. And frankly, it’s more appealing to my lazy side to spend money than to spend my time. The problem is it doesn’t work until you’re big (see Reason #1 of 7 – the Problem of Penguins.), or unless you’re fortunate enough to find that very small, unique niche magazine that has all your clients reading it (like Natural Awakenings for someone selling “green” products). And Passive marketing never works alone.

What do you have more of – time or money? If you’re Starbucks, it’s money. But if you’re Joe’s Java Shop – it’s little of either, but definitely more time than money.

There are basically two kinds of advertising – Passive and Active. Passive Marketing is focused on spending money to get new clients. Active Marketing is focused on spending time to get new clients. Big businesses like Starbucks can (and have to) focus on Passive Marketing because in comparison to Joe’s Java Shop, they’re rolling in dough. Joe should stop playing by Starbuck’s Passive Marketing rules, and start spending time, not money, to get new clients.

Big business rules of marketing work really well for big business, but they are the fastest way to ineffective, expensive, and wasteful marketing for small businesses. Who are your advocates, your raving fans, your relationships? People buy from people (not companies), and they buy more from people they like. Get ACTIVE in these relationships, and get these people opening gates for you.

Over a year ago a restaurant opened without spending a dime on advertising or direct marketing. I’d give you the name but it doesn’t even have one of those either. The first week the owner of this ‘no name” restaurant invited everyone they knew to eat for free – Monday through Thursday; best friends on Monday on down to acquaintances on Thursday. They all went out and recruited other relationships and the restaurant has had great business every since. Active Marketing!

Go get ‘em. But don’t expect Passive Marketing to be successful unless you’ve got a big wad of cash to burn. Relationships will get you much farther, much faster, much cheaper.

Build it and they will come? Only in the movies (and in big business).

A lot of marketing success is just dumb luck, other times its extensive research. But once somebody hits on something that works, a Mother Duck/Duckling phenomenon kicks in. If it worked for the other guy, maybe I should try it, too. Maybe not.

So we try it, and it works! Then a few others jump on board and pretty soon that unique marketing tactic is being used by nearly everyone in the same industry. Now the tactic is no longer yielding the results it did when only a few people were using it simply because it’s no longer unique and the customer sees no difference from one company to the next.

They’re all in lock step waddling down the same path.

Every medium has suffered from this as it proved to work, became popular, then saturated and then ineffective.

The problem is that we confuse cause and effect. We think that since everyone in our industry is doing it “this way” that it must work, so we do it, too. There is safety in numbers and if I’m going to spend a lot of money on a marketing campaign, I want to know that everyone else would do it that way, too. But if everyone is doing it that way, cut and run. “Me, too” is a bad advertising strategy.

Formula websites are an alluring form of “Me, too” advertising.

People pay hundreds to thousands of dollars to be let in on the secret formula of how to build a unique website that will get you traffic and results like none other. So thousands spend money to be sold the same formula, so they can be nearly identical to everyone else who has paid to get this secret.

I’m guessing the formula still has some verifiable results. I also know that every time I hit one of these sites, I leave immediately because I believe whoever bought the formula is banking more on the formula than on the actual value of their product.

I’m an early adapter, but as others begin to see this formula repeatedly, it will be a big problem for all those that banked their identity on being unique by being exactly like tens of thousands of others. The saturation effect isn’t far away.

What can you do to be different? Where can you make a splash where no one else is skipping stones? Are your competitors all in newspapers, TV, radio, Yellow Pages, direct mail? It’s counter-intuitive, but the more your competitors are concentrating their market in traditional mediums, the more you should think about going a whole different direction. You’ll get a much bigger bang for your buck.

“Me, too” is a waste of your money and time. Waddle down your own path.