Importance of Marketing in a Small Business
"Business is not business. Business is marketing."
Business is all about sales and marketing. And this is especially true for a start up venture or a small business. Without sales and marketing, nothing starts. It is the lifeline of your business. And you'll need to treat it that way.
Many claim the biggest reason a start up business fails is due to underfunding. This is not necessarily true. As long as you keep your expenses low, you can survive a lifetime. The real reason a start up business fails is because of lack of sales and marketing.
Think about it. Say you start out your business with $50,000. To take care of business, you'll start spending that money. You'll use it for things like rent, advertisement, payroll, travel, and general administrative costs. You'll start to deplete your reserve. Each month, you may spend $5,000 on these things above. This will give you a lifeline of 10 months that you can stay in business without any sales.
(*$50,000 divided by $5,000 = 10 months. We didn't factor in the fact that $5,000 in expenses is low, and did not also figure out the cash flow needed to operate your business without you running out of it.)
Now, if you are used to the employee mindset, you'll expect that money will flow into your business if you just work hard. But in reality, in a start up venture, this is not the case. Money won't flow in if you simply work hard. You'll really need to go out and hustle in order to bring in the customers. You'll need to get into the sales and marketing mindset.
You’ll really need to go out and hustle in order to bring in the customers.You’ll need to get into the sales and marketing mindset.
You'll have to transition from having the employee mindset to the sales and marketing mindset from Day 1 to be successful. You'll need to promote your business. You'll need to bring in traffic and build trust with your customers. You'll need to service them. And you'll need to continue developing your sales and marketing to be successful. It's all about the sales and marketing mindset. Continue to learn and continue to work on it.
Good Product, Bad Marketing vs. Bad Product, Good Marketing
Marketing and sales is really the lifeline for a business start up. Without it, you'll fail. But for very many entrepreneurs, this concept tends to be counterintuitive. We all like to think that by having a good product or service, customers will flock in to purchase it. So we spend our time to make the perfect product. We think that the having the perfect product in itself is great marketing, and we don't take the time for sales and marketing efforts. And this is a formula for failure.
Guess who succeeds in the world of business start up?
- Businesses with a great product but with bad marketing.
- Businesses with a bad product but with great marketing.
The answer is #2.
If a business has a bad product, but has great marketing, it will likely succeed. A good example of this is the infomercial's that we see on TV late at night or on the home shopping network. As an average citizen you sort of know that some of the products out there on TV infomercial's or the home shopping network really aren't as good and spectacular as you see them on TV. You know that new food processor, that cleaning material, or that dieting system is another fad or a product that may not live up to the high expectations. But if you are an average citizen, you probably have picked up the phone at least once, and purchased that new blender or that "cut through anything" knife. They just have great marketing that make it hard to forego.
These are products that may not be superior, but have great marketing. These are the products that sell and make the owner of the business a lot of money. These are the products, with the right kind of management, can make it big.
On the other hand, there may already exist an extremely valuable product, service, or website out there that will significantly change our lives. But because their marketing is weak, we don't know about it. No one knows about it. And because we don't know about it, we don't buy. We can't buy. That company will lose money every month. It will continue to be small. And it may ultimately fail if they don't get their act together.
Businesses with bad marketing tend to go into a declining spiral. They usually operate at a loss, and that means they deplete their reserve of money that they started their business with. With a declining spiral, it becomes more difficult to spend that money on new things - like advertisements or hiring a PR firm - because they are losing money every day.
Businesses with bad marketing tend to go into a declining spiral. They usually operate at a loss, and that means they deplete their reserve of money that they started their business with.
The business just can't afford it. This compounds the declining spiral because they will continue to not have marketing and sales, and continue to operate at a loss. These kinds of businesses are operating in death row. And they will either run out of money or will need to downsize.
This is the business that fails. This is the businesses that lose the owner a lot of money. This is the kind of business that you don't want to operate.
One Last Time: The Importance of Marketing
Marketing, especially in a small business, is extremely critical. This is due to the fact that you have limited capital. Limited capital equates to limited number of months you can operate before you run out of money. And without marketing, you'll continue to run out of money, never giving you the ability to afford a marketing campaign or capital to further improve your product or service.
Marketing is everything. Marketing is life of the business. Market your business like crazy to bring money in every day, every week, every month, and every year.
We know that this intro on marketing may have been a bit annoying. But this is how much marketing is important in your business. Other things are also important, but marketing is really the biggest priority. Especially when starting out. Be sure to engage in marketing from Day 1. Be sure to have a marketing plan, train yourself and your staff sales techniques, and bring in money to stay alive, make money, and grow your business.
Finding Your Niche
Now that we've touched on the critical role marketing, it is time to explore some of the ways to promote and market your business. Marketing your business as a start up will mean that you have to become creative. This is because you have limited capital resources. You can't go out to spend a lot of money on huge ads on newspapers or billboards. You have to have to keep your marketing as effective and as efficient as possible.
You'll likely want to know the customer's basic profile, their needs, their buying patterns, and anything else that will help you predict the customer's action
To do so, your best chance is to find a niche. A niche is basically a specialization or a distinct target market that you are going to pursue. In your mind, it is narrowing down your target prospect base to a point that will become manageable for you to market to. By being able to narrow down, you can come up with effective methods to reach your market without spending a fortune or wasting your precious time.
A niche market should be a market that you understand deeply. You'll likely want to know the customer's basic profile, their needs, their buying patterns, and anything else that will help you predict the customer's action. You really want to know what their motivations are in order for them to take their time to come by to spend money on what you have to offer.
A niche can be anything like the following:
- Chinese Americans living in 90503 that have an income of over $80,000 a year.
- Small business owners in the downtown area looking for BlackBerry and Internet devices.
- Students at a community college in a given district.
- Particular nationality, occupation, or geographic region.
Often times, niche markets are found because you have worked with them in the past or you were affiliated with the market in the past. By being able to isolate your target market to something that you know well, you can come up with marketing plans that are extremely efficient and effective.
So, think about it deeply. You'll need to find your niche to be successful. What markets do you know well? And what markets do you enjoy working with? What markets do you know will make the kind of money you want to make? Find your niche market!
The Marketing Plan
Now with the background on the importance of marketing and figuring out your niche to be efficient and effective with your marketing, it's the next step of creating a marketing plan.
A marketing plan can be elaborate or simple. It just needs to be well thought out in order for you to be able to predict that you will survive this year, and even make some money. There are software out there like, Marketing Pro by Palo Alto that can be helpful, or you can just use your brain, a book, and something to write your plan in.
Of course, the table below can get a bit vague and complicated if you have multiple marketing methods that you use to attract people to your business. It may have been a combination of methods you used that brought the customer in. But with good documentation, and careful analysis, it does become easier every month or every year to be able to predict the numbers and percentages that you can expect through your marketing campaign.
Again, having a marketing plan is extremely critical so that you can budget your time, energy, and resources into it. For marketing plans and other information, be sure to look into the worksheets available at the end of this chapter.
The Advertising Message
Your advertisement message is the voice or statement that you create about your business. It is there to make your prospective customers figure out what your business is all about. There are some tips that you should consider when creating an advertising message.
Make sure you communicate to your target audience in their language, and speak personally to them. If you write a letter, make it look and sound like a letter, and tell a story that involves the reader.
Use marketing methods your target customer is comfortable with. Using the Internet for younger customers and classified ads for older customers can be a good example.
Create a strong message and highlight it, so that it is not missed. Be sure to use messages that grab attention. Often times, you see ads that may say,
"WARNING: You Must Read this Report before Purchasing Your Next Cell Phone!"
This is a famous technique used by many marketers these days to grab your attention. They will go on to write a very long report about your product, and prompt to get some kind of contact information (phone, fax, email) so that you can follow up with your customers.
By placing an attention grabbing headline with a very detailed message, customers will be able to understand your business more and will identify with what you can do for them. In addition, if you make effort to follow up with the customers on a systematic basis, they will gradually become your prospect from the relationship that you build through your processes.
Here's another example similar to this used by many big companies as well.
"Call Right Now to Get your Free Report on How to Invest for Retirement."
You hear ads like this all the time in CNBC and other big financial publications. Big businesses tend to use the similar techniques as the one mentioned above, but in a more subtle manner. As a small business, you can be aggressive as the first headline above, or use finesse to create an advertisement message that is more subtle. It will likely depend on your target market. But the important thing to know is to:
Grab their attention to prompt interest
Have an interesting enough article to make your prospects read it. The purpose of the article should be to help the prospect understand your business and start identifying with your business. Think of what an infomercial does to you. Try to replicate that via a letter.
Make the prospect enter their contact information for you to follow up with them. It can be either phone, email, or address. Many businesses make it this a condition prior to giving the "free report" to the prospect.
- Follow Up with them constantly in an aggressive or subtle manner.
- Continue relationship with them without giving up.
This is a proven technique used by many successful businesses. Try to incorporate this technique into your business as well. It is called direct response marketing, and there has been very many books and articles on it.
You can also do a Google search to find them on Wikipedia.
- Identify the one key word in your message and emphasize it. Let your motto be "One ad - One Idea."
- Give the target market a reason they can care about your message. For example, "Are your cell phone bills too expensive? I am here to help!"
- Use facts or statistics to back up your message. Pharmacies do this all the time with drugs. "Four out of five pharmacists recommend our brand!"
- Be specific about what you want your target market to do next. If you are doing direct response marketing, you want their contact information. If you are doing direct marketing, you want them to call you or visit your store.
Methods of Marketing
Now is a place to talk about the methods or channels of your marketing. We really like the phrase hustle when thinking about marketing in a start up venture. There's a lot of self-promotion to do in order to increase the awareness of your target market of your business.
Here are a number of marketing methods that you can employ at your business. Be sure to reach out to your initial market niche initially in order to get your business started. By going too broad, you can risk losing it all. Usually the narrower your target market, the more successful you can be. The more broad you go, there is a higher likelihood of failure.
Schools: College & University
Schools can be a great place where you can find many first time buyers of your products or services. If you pick a big college or university, there are a high number of prospects you can get in contact with. They are also great because the target market is very well specified - usually young, first time buyers, with good amount of education.
Fairs, Festivals, Art Shows, and More
Your county fairs, swap meets, local markets, festivals, are also a great place to find your customers. By attending a large fair, you can get exposure to a high number of people. In many occasions, putting out a booth at a fair will not take more than $100 a day even at some of the larger markets. Do your research and inquire to see if this can be a good opportunity for you.
Road Side Signs
Road side signs may work well for you as well. You can put it at a busy intersection or a place where there is a high number of traffic. You will likely need to check with the proper authorities to keep you out of trouble.
Lately, there is a nice movement that allows small business owners to tap into TV commercials. Cable operators have available TV spots at very reasonable rates, sometimes $100-$200 per spot, or even cheaper. These commercials will only air and advertise on local areas that are specified. It's a great way to gain exposure and help you to establish your business' brand image.
Flyers and Brochures
Flyers and brochures are standard ways to promote your business. They can be costly at times, but if you play the game well, it should reap you good results. You may want to make a brochure once to talk about your company, or a monthly flyer on the specials you are running.
Business cards are great tools to have as well, especially when you are networking with others at events and Chamber of Commerce. You can make the standard business card with your name, phone number, and company logo, but why not be a bit more creative with it?
Personal letters, if they are really personal, can also be effective as well. The point here is for your personal letter to not look and feel like a direct mailer that we toss in the trash without even opening it. Sending letters can add up in expenses.
Many recommend sending letters in a plain white envelope. If you can take your time to even write the addresses yourself, there is a much higher rate of getting it open and read. For small businesses, it's better to make your letter as personal as possible, as opposed to being it be professional. Think of you writing to your parents or your grandparents in a letter. If you can imitate that, you'll likely get your letters read at a much higher rate.
Classified ads are good ways to market your business as well. With limited space, be sure you be clear and concise, and identify what actions the reader should take for you. Classified ads can be cheap, and using targeted papers such as a school newspaper or a local newspaper may be effective and efficient for you. You may want to avoid national papers like the NY Times when you're starting out due to the market being so broad.
Newspaper ads on national papers will likely be too expensive and too ineffective for you when starting out. But you may want to consider targeted newspaper such as the school/university newspapers or the local community newspapers. The ad rates will be much more reasonable, and you are able to reach your target audience more efficiently this way.
Radio advertising is also another media that is getting replaced by online advertisements. With people using iPods, XM Radios, and their CDs in their cars, radio advertisement may or may not work for you. Contact a few stations that you listen to, or a few stations that your customers may listen to, in order to get their rates to advertise. Analyze if investing in radio advertisement will work well for your business. Radio ads work well for items like mortgages, auto dealers, jewelers, and insurance companies.
Public relations or PR is a great way to gain exposure without spending a dime if you do it yourself. Of course, there are PR firms that charge a bundle to help you get your name out. PR at the earliest stages must be targeted and niche oriented. Since PR campaigns do take time to organize the press release, contacting the press, and meeting with them, you'll need to concentrate your efforts with one or two media companies when starting out. But if you can make PR one of your marketing competencies, it can get you great results.
Direct mails are letters or flyers you send out to via mail to communicate your offer to prospects. Direct mails are expensive for small businesses starting out, and the response rates tend to be very low. As mentioned in the "Personal Letter" section, the point to emphasize when using the direct mail approach is to try to make the mail as "un" commercial as possible. The first battle you will have is for the prospect to actually open the mail. If it looks like a standard direct mail from a company that they've never heard, it will likely go in the trash before even getting it opened. So, the best way is to use an plain white envelope, possibly hand-write all the address, and personally sign the letter.
Door hangs are low cost, but labor intensive efforts to get your name out there. It is labor intensive because you will need to hustle your way to every door step to get it in place. The effectiveness of door hangs can vary. If you do it on a rainy or damp day, and the door hangs are soggy, they will be in the trash in no time. Even on a sunny day, door hangs can be somewhat of a nuisance, and they have a high likelihood of going in the trash.
Sponsoring Sports Teams
Sponsoring sports teams, like your local softball or soccer team may work out for you. For one, you will likely get a fixed set of customers and referrals. Usually to sponsor a sports team, you will need to pay for the team's uniforms which can run up to $500-1,000. It may possibly be cheaper depending on the sport you sponsor.
However, you may not want to sponsor a local sports team as the first steps of your marketing campaign. It may be a step that you may want to consider once you have established your business somewhat. Regardless, this is a judgment call, and if you think you can attain enough customers, then by all means, sponsor your favorite local sports team.
Advertising in a trade publication will work well for you if you provide a unique service that the industry players need. It may not be the best route to take as a dealer or agent starting out in the business. However, as you establish your business, and find other niche services you can provide, a trade publication that caters to the industry players maybe a good source of advertisement.
Business directories are good to reach out and get found by other businesses. If you decide to primary focus on business to business transactions, a business directory should be a good source of advertisement for you.
Chamber of Commerce
Joining a chamber of commerce is a great way to meet and network with other business people in your area. Aside from you selling your services to other business people, you may also be able to find critical suppliers and business that you may want to use for your business as well. It is also great to get involved in community activities and give back to the community that you are in. There is usually a fee to join a chamber of commerce, so see for yourself if it is worth joining by attending some of its free events first.
Weekly or monthly newsletter is a great way to keep in touch with your customers, and remind them that you are out there to meet their needs. The newsletter helps to establish that relationship critical for your business success. Combine your newsletters with the direct response marketing that you engage in. Although newsletters can be cumbersome, it is a great marketing tool. Make sure you do it on a consistent basis to have any effectiveness. Even on the newsletter be sure to include attention grabbing headlines, and actions to take by the prospect receiving it.
Billboards may not be a very effective method of advertisement when you are starting out. But if you have a great opportunity, you just can't miss, they are a great marketing channel.
Entry Form & Contests
By engaging in a contest with an entry form each month, you are able to gather lists of prospects that can become your customer in the future. By using entry forms that can be entered conveniently, the amount of response you may get can far exceed the prize. Using online sites like MySpace you can gain great success of gathering lists of prospects.
With regards to the prizes, leverage the business you are in to provide prizes that are cost effective for you, but of great value to your customers. It can be the latest phone upgrade, cool accessories, or gift certificate to your store. Make it appealing enough so that the customers would want to enter in your contest.
Catalogs can be created on a quarterly or bi-annual basis to present what you have to offer to your prospects. Catalog printing may cost quite some bit, so it is worth your time to analyze the cost vs. benefits of producing a catalog. In the world we live in today, creating a catalog online is much more cost effective. You can then create a one page flyer that will direct your customers to your catalog site. Using services by Yahoo and other small business web hosting companies should make this process very easy and cost effective.
Sales visits work well if you are going to sell something big to a person or a business. It doesn't make much economic sense to go out and do a sales visit for one line of service, but it may be worth your time and efforts if the sales visit is going to yield 5-10 lines. Regardless, sales visits do have a high rate of closing, so if you are hungry to make some sales, and can possibly employ people on a commission basis, have a sales visit strategy may work well for you.
Trade & Cultural Shows
Trade and cultural shows can work well due to the fact that you are exposed to a large number of people in one given setting. Similar to doing colleges or fairs, trade & cultural shows can help you to get some good number of sales. We knew a dealer that did 50 lines of sales in two days of cultural show. That is not a bad pay day.
Seminars work well to build up rapport with a prospect and educate them on the services you can provide for them. Currently, a great number of people still do not know how a BlackBerry or a Smart Phone works, and even more do not know the existence of the Wireless Internet that you are able to use anywhere within the cell phone network. Doing educational seminars to help your prospects understand some of the services out there will help you to make these prospects into a customer.
If you like to watch business news, you know that gift cards these days are a great profit source for big companies. You can also offer gift certificates to your clients to help promote sales to customers' acquaintances. Make sure that you don't sell it at a huge discount, because then people can buy your gift certificates today, and come back tomorrow to get an instant discount on your products. Also, make the gift certificates difficult to duplicate by using stamps or your signature on the certificates.
Car Signs and Magnetic Signs
If you have a nice car, and willing to use that as a source of your advertisement, you can put on signs and decals to promote your business. That way it is low cost, and you can advertise as you go for a drive. Even more, you will definitely be able to use all or a portion of the car's expenses and payments as business expense helping you when it comes tax time.
Obtaining mailing lists for direct marketing purposes can be easy if you use the services below. Many will provide lists for you to use for a fee.
Search Engine & Online Ads
Online advertisements or search engine advertisements are items to consider after you setup your website. If you can make a very compelling offer, by all means you should consider the possibilities of online advertisements. But in the first few months of business, your money may be well spent going through the SNS sites and using blog's effectively.
Search Engine Optimization (SEO)
Search engine optimization is an area of study that configures your website so that the major search engines pick your website when a keyword is typed in. Basically, it is the effort taken to bring your website to the top of the list when a given keyword is entered. Just image the type of hits you can get if your site comes to the top when the keyword, "cell phone" is entered in Google. Basically, you'll have thousands of people visiting your site each day just for that.
Blogs have become a recent phenomenon in the world of advertisement. For one, it is pretty powerful to have a personal blog by the owner of the company so that your customers and prospects understand what you go through to provide them with excellent service.
To do business today, it is almost expected that you have a website for your business. If you aren't a huge web designer, you can always hire one or ask a web competent buddy to help you out.
Depending on the business you are in, you can use YouTube very effectively to promote your business. This does go contrary to the niche approach since you will have marketing access to the entire YouTube users across the world. But if you play the game right, YouTube is obviously a cultural phenomenon that can be of great utility in terms of marketing for you.
Pod Casting is similar to YouTube, but it can also be solely audio. Using Pod Casting to market your service is still relatively new. If you are using the Video Pod Casts, you can use it similar to You Tube. The audio only podcasting must be utilized a little differently for marketing sake. Post Casting can be a great source of direct response marketing for you, where you will prompt your prospects to enter an email address before obtaining a pod cast. Upon receiving the email address, you can go on to do email marketing on them.
Email marketing is also a great way to advertise your business. It can be free if you manage the email list yourself. You can also use some of the services out there in order to make your email campaign more efficient.
Social Networking Sites
Effective use of social networking sites like Facebook, LinkedIn and others out there will be a great source of free advertisement. Your first batch of customers can be your buddies from college. You can then try to reach out to their friends or your past acquaintances.