I’ve heard the same phrase from many small business owners: “I’ve tried, it doesn’t work for my business.” The practice of advertising is a mystery to most small business owners. It is quite difficult for them to try to perfect the process of doing business with their customers; acquiring new customers is another challenge. Most business owners are not fully aware of the difference between advertising and marketing.
Let’s take some of the mystery out of practices.
One of the most misunderstood aspects of the process is the distinctions between: marketing, advertising and selling:
Marketing: is the general collection of tools used to build your business. Marketing has one overarching goal: to drive customers through the process of noticing your business, buying from your business, enjoying your business’s products or services successfully enough to tell their friends and family about it, and coming back for more if corresponds.
Some of the marketing tools include:
1. Advertising
2. Public Relations
3. Direct Mail
4. Personal Selling
5.Internet
6. Printed promotions
7. Education
Advertising: Advertising does not sell to your audience, it is a tool similar to the male ostrich tail; their job is to get you noticed for the specific things you do well. Advertising promotes the distinctive features, benefits, and advantages of your offering to a broad market. The goal of advertising is to attract valuable leads for the sales process to take place.
I have sold Yellow Pages advertising to business owners who initially felt that the Yellow Pages ads attracted a lot of people who were just buying. They didn’t want to waste time with “looky loo’s”.
If someone takes the time to call or email you about your product or service, why treat them with disdain? These people are looking for the right answers to their problems. Even more important, each personally knows 250 other people. Every opportunity to make a connection or a sale should be treated as equally important.
Selling: Once the advertising has attracted the potential buyer, the selling process takes over. This is done either through personal selling or through the use of point-of-purchase materials (ie, a store display, video demonstration, etc.). The sale should come into play after a prospect has been determined to be a good fit for the product or service.
The mystery and confusion begin when a business owner must decide which tools to use in the customer acquisition process. Who should be advertised to? Where should you advertise and why? How do you advertise? What kind of return should I expect to get from my advertising program? When do I use the other marketing tools to reinforce my advertising program? What should be my relationship between advertising and selling?
Who should be advertised to? Let’s be very clear on this. You should never spend a single dollar on advertising until you know who you will be selling your product or service to. You shouldn’t even be in business if you have no idea who you want to do business with.
Marketing is used to identify your ideal market. Sure, you may not get 100% of your ideal market, but if you know who will most likely benefit from what you have to sell or service, you can get more of them.
For example, if you are a chiropractor in a big city, your ideal market might be the couple in their 40s to 60s who are health conscious and active. They seek to keep fit and are open to CAMs (complementary and alternative medicines). They may have an unfavorable view of the current healthcare system and want to take a proactive approach to health maintenance. So let’s say after determining your ideal market, you identify 15,000 of them in your market region. So now you have 15,000 likely prospects that you can reach on a regular basis.
Where should you advertise and why? If you wanted to find a 34-year-old Buddhist from Cambodia, where would you look for one? The question may seem a bit silly but you know that you would not start by going to all the mosques in the area.
Sometimes you have to eliminate all the unlikely places to search until you get to the most likely ones.
Of course, you should choose your ad program targets based on how many of your intended prospects are likely to see your message. If the local gym in your area has a membership demographic of more than 3,000 people ages 45-65, you may want to advertise in their monthly newsletter. If they don’t have a newsletter, you might want to sponsor one for them.
Remember the “The best place to go fishing is where the fish bite.” Take the time to get to know your target audience and their clothing purchases.
How do you advertise? Imagine your expensive Mercedes breaks down and the mechanic says it’s your fuel pump. He needs to change it, so he’ll take a torch and cut the hood open, open the engine block, and then replace the fuel pump. Once you’re done, he’ll re-solder all the pieces together and return your vehicle to you.
Would you give this guy the go-ahead to go to work on his vehicle? Of course you wouldn’t. Once he determines what he needs to do, he must be careful how he executes the solution.
Going back to our chiropractor, if you find that the best way to reach the 15,000 45-65 year old couples in your area is through the Yellow Pages; then you must decide if it is profitable, timely and competitive.
The goal now is to figure out the best way to reach all or most of those ideal 15,000 prospects.
Will you get comparable results from repeat exposure in the gym newsletter where you will have a captive audience and no competition?
There’s no reason not to use both the yellow pages and the health club newsletter if they do their part financially. The goal of advertising is to get valuable leads for the sales process to take place.
What kind of return should I expect to get from my advertising program? My answer to my clients to this question is usually surprising; the answer is a big zero (0). How can a business owner spend so much money on advertising and expect nothing in return?
This is the basis of the confusion between marketing, advertising and sales. The value of advertising in the marketing mix is in the generation of leads. When used correctly as such, the measure of its effectiveness is how many leads are generated.
This is why it is so important to distinguish between the various marketing tools. If our chiropractor got 20 leads every day from his ad campaign and the lead had a lousy conversion rate, I bet he would blame his ad for not attracting more customers.
Calculate your response rate by quantifying advertising results. Measure the number of potential customers coming in and adjust your ad text to test for best results.
When do I use the other marketing tools to reinforce my advertising program? Advertising should never be used alone. Remember that the average adult has to deal with over 2,700 messages a day from all types of media.
Marketing should be seen as a combined effort to reach the minds and hearts of your target market. You should be using at least five of the seven marketing tools every week. Depending on the age of your business and your business plan, you should budget 10-15% of your estimated annual revenue for marketing. If you just opened your doors in the last five years, increase that up to 20%. There’s a reason Pepsi and Coca-Cola each spend more than $400 million a year to satisfy their shareholders.
What should be my relationship between advertising and selling? Think of the relationship between advertising and sales as complementary. If your advertising is generating a large number of leads, tailor your sales strategy to convert at least 30% of your leads while capturing all of your leads for systematic follow-ups.
Keep in mind that at any given time, 3% of your market is ready to engage with your product or service. The goal is to first convert 3% of your leads. Then to work on selling to those who are on the fence. Whether through personal selling, direct marketing, or point-of-purchase sales, your ratio will be determined by several factors, the offer, the product or service, and the immediate need of the prospects, and of course, the price.
Don’t get too anal with the proportions. The most important thing to remember is that marketing is an inexact science. You will have to keep testing and trying to get better results as the market changes.
Determine the value of a new customer and the lifetime value of your customers. Once you do that, make sure your marketing efforts generate enough new business to cover the cost of getting new customers, and that your sales efforts cover the cost of keeping you in business.
Tweak the numbers and track consistently. If your estimated marketing budget is $37,500 for the year and your estimated revenue is $250,000, then you have a standard starting point.
At the end of the year, your numbers should add up. If you haven’t made the $250,000, don’t just blame your advertising, look at your list of leads and determine if you’ve converted the required number into sales.
If you don’t have a list of potential customers, we need to re-evaluate your purpose for advertising.