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Fixing Your Marketing; Random Hope is not a Marketing Strategy

Why doesn’t our marketing work? We are measuring the wrong thing.

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 anROI (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 toPROFIT, not to ACTIVITY. You’ll go home with more money.

Fixing Your Marketing; Random Hope is not a Marketing Strategy

Why doesn’t our marketing work? We are measuring the wrong thing.

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.

Fixing Your Marketing; Build it and they will come – not

One of at least seven reasons why you’re marketing doesn’t work.

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).

Fixing Your Marketing; Build it and they will come – not.

One of at least seven reasons why you’re marketing doesn’t work.

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).

Fixing Your Marketing; Stop Focusing on Your Competition

How much time and energy do you spend trying to figure out what your competition is doing? You’ll win buzz word bingo with “competitive analysis” and “benchmarking”, but will you win customers? Is our competition really a good place to look to decide what we should be doing?

When I was landing and managing clients like Microsoft, TAP Pharmaceuticals, Seagate, Veritas, Jostens Publishing (yearbooks) and other Fortune 500 clients, I never followed what my competition was doing. I followed my clients and potential clients very closely, and expended all my efforts trying to figure out what they needed and wanted, where their entire company was going, and how we could help them get there.

I always got a lot of pressure to find out who the competition was, what they were doing to market themselves, etc., but I was too busy focusing on my customers. I suppose taking a look at the competition is a good idea, but I found that most of the companies that spend a lot of time comparing themselves to their competition ended up mimicking them, selling against them (instead of selling FOR themselves), and deciding what services they would offer based on what the competition was doing. It crushed creative, innovative, and consultative thinking about where they should go next.

If I focus on my competition and on marketing against them, I lose my focus on bringing the best, most innovative product/service to market. Having something people want and find really useful – that’s the key. And you don’t find out what people want and find useful by asking your competition, but by asking your customers and then taking a proactive leadership position to bring things to market that your competition hasn’t begun to think of.

How do you do it? Proactive leadership. I must lead my customers in my area of expertise. We don’t respond to our customers or to the competition – we lead our customers into the future by knowing what they need.

How do we know what they need? Most often, companies make the mistake of working real hard to provide their product or service. Period. (And a big mistake).

We need to work real hard to know the vision, mission, strategies, objectives, and action plans of our client’s entire company, THEN ASK OURSELVES HOW WE FIT INTO THAT. Why would we want to provide service without knowing how what we do helps them get to their overall objective? When we figure out how we fit into their bigger picture, it changes the way we view our own products/services, and that creates innovation and proactive leadership in our area of expertise.

You are not a rock, you are not an island. You are part of your client’s overall plan to make more money. If you get their bigger picture, you’ll make more money, too.

Stop focusing on your competition and start focusing on your client’s overall mission and how you fit into that. You’ll find yourself leading them in your area of expertise, and they will find themselves leaning on you heavily for much more than your product or service.

Marketing isn’t about clever tag lines, it’s about focusing on the right things that will make our clients want to buy more from us.

Fixing Your Marketing; “Me, Too” Doesn’t Work

Why doesn’t your marketing work? Reason #3 – The Two Last Words of a Dying Marketing Campaign – “Me, Too.”

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.

Fixing Your Marketing; Features vs. Outcomes

Why doesn’t your marketing work? Reason #2 – Maybe you are marketing Processes, Features, and Benefits/Results when you should be marketing Outcomes. My friend and fellow Team Nimbus facilitator, John Nordlander reminded me of this during a MasterMind session with some great business owners this week.

Processes – Most of us are making money at something we are either passionate about or at least deeply involved with. That attachment makes us want to tell everyone how we do what we do. But they really don’t care. HOW we do what we do is only interesting to us. Stop trying to tell your customers HOW you do things (actually they’ll ask later if you market your Outcomes first).

Features – The same love for how we do things (Processes) makes us want to tell people all about the features of what we sell; how it stretches farther, has stronger glue, spins faster, takes up less space. Again, your customers really don’t care. Stop trying to tell them WHAT your cool product can do (actually they’ll ask later if you market your Outcomes first). FYI – “our system is 99% reliable” is a feature. Boring.

Benefits/Results – Now we’re getting to some things that are on some customers’ radar screens. What’s the benefit to your customer? What result will it bring them? If I can get them to realize the benefit of using my product, I’ve got a shot at getting their attention. The problem is that benefits and results are “clinical” – 4 out of 5 dentists recommend. Or “you will have cleaner teeth”, or “your car will run cleaner”. While some customers will connect with the clinical results, it’s not enough for most.

Outcomes – The difference between this and a Benefit/Result? We connect intellectually and “clinically” with Benefits and Results, but we connect subjectively and “emotionally” with Outcomes. “You will feel the power”, “You will have more free time”, “Skiing will be more fun”, “People will like you better”, “You won’t have to sweat the details anymore.” “Life will be easier.” Outcomes stir the emotions.

Buyers at all levels, whether a child buying bubble gum or a hardened government buyer – all of them without exception buy emotionally. If you connect on the emotional level, you win. Bank on it. Help people connect with Outcomes.

By the way, if you do, they will then want to know the clinical Benefits/Results, all the Features, and how in the world you make it happen (Processes). So you’ll still get a chance to share all that “craftperson” stuff pent up inside. You’ll just have to be patient and wait until they want to hear it – after they connect emotionally with the Outcome.

Share Outcomes and you’ll have more fun selling, have happier customers, and live on a tropical island. And the birds in the trees around you will sing continuously. (OK, a little heavy on the Outcomes, but you get the idea.)

Fixing Your Marketing; The Penguin Problem

Create our own waddle.

Reason #1 why your marketing doesn’t work – You are using Big Business marketing rules. If you’re playing by their rules, you’re going to lose just about every time. Make up your own rules and you’ve got a better chance of your marketing working.

It’s a problem of penguins.

Marketing is noise – 1,000 penguins on a rock outcropping. It’s like white noise out there. What do I mean? The biggest competitor in the industry spends $1,000,000 on advertising and grosses $10,000,000 in revenues – a nice 1 to 10 return ratio. So we assume that if we spend $10,000, we’ll get $100,000 back – 1 to 10 – right? Wrong. Why? Because we’re focused on the wrong ratio.

Back to the penguins. Our $10,000 is fighting with their $1,000,000 for attention. They own 990 penguins all making noise for them, and our solution is to add 10 penguins to the same rock to make noise for us. Our penguins are drowned out every time.

And worse yet, we’re competing against everyone advertising in the medium we’re using, so it’s really tens of thousands of penguins against our 10. The marketing noise is deafening. We don’t stand a chance if we play by big business rules.

I met someone starting a small business who was about to put 100% of their $10,000 annual marketing budget into newspapers – a few penguins up against thousands. We got her to redirect the funds. (FYI – If you’ve got thousands of penguins or a paper with a unique niche, newspapers can work.)

Until they have a big enough budget to place more penguins on the rock, how could they spend that money better? Understand this: the two last words of a dying marketing program are “Me, too.” Everyone else is advertising in a certain medium, so I think I better be there, too. That seems reasonable, but is the best way to waste your money. Instead, ask yourself, “What could I do to make a noise where no one else is squawking?”

I do a weekly lunch workshop with 35-50 business leaders and once a quarter I’ll ask “Of the four major ways to market ourselves (advertising, direct marketing – including cold calls, public relations, relationship marketing) which one brings you the overwhelming majority of your clients?” If there are 40 people there, 39 answer “relationship marketing” and the other guy didn’t understand the question.

If you spend time and money building a network of gate-openers and raving fan clients, you win. The big guy with lots of money doesn’t have your relationship network and would never invest the time to create that network. Until you’re big enough to own a big “waddle” of penguins (yep, that’s a penguin herd), put your dough into relationships.

By creating your own marketing rules, you beat the big guy, because he actually can’t afford to play by your rules! All he can do is keep throwing money at the problem. And since you’re penguins aren’t on his rock, he’ll never beat you no matter how big his waddle is.