Save Your Advertising Dollars by Saying "No"

As small business owners, so many of us have fallen prey to the smooth talking media sales reps.  The minute you open your doors for business, sales reps from the TV stations, newspapers and radio stations are the first ones in your door.  In their hands they have what I like to call “the deal of the week”.  You know you need to market your business, especially when you’re just starting out, so you sign up for these promotions because they’re “a limited-time promotion” and “you’ll never get a better deal”.

I have a client who, when I first met her, had spent over $15,000 in advertising the previous year.  Her comment to me was “I’m not sure if any of it worked.”  This was a very clear example of someone who had been too nice to say, “No, thank you” to the sales reps.  I understand that sales reps need to make a living.  I get that.  What I’m saying is that you need to be smart about where you’re spending your money.

Before the sales reps ever come walking through your door, here are some things you need to do to save yourself a lot of money.

1. Know your customers very, very well.  I don’t just mean your existing customers, but who your ideal customer is.  Who do you want to communicate with?
2. Know where your customers are.  Do they read a physical newspaper or do they read an online newspaper?  Maybe they don’t read a newspaper at all.  Maybe they follow their favourite media online and get updates through social media.  You can’t communicate effectively to your customers if you’re not sure where they are.
3. Create some marketing goals.  These goals will stem from your overarching business goals.  Do you want to attract a new demographic?  Do you want to introduce a product or service?  Decide what you want.
4. Establish some tools to measure the effectiveness of your marketing campaigns.  If you have no way of tracking what’s working and what isn’t, you’ll never know what forms of advertising to use.  This is precisely why too many business owners wind up spending way too much money on their advertising.
5. Stick to a budget.  When you develop your marketing plan for the year, you need to create a budget to work from.  Stick to that budget and don’t be afraid to tell the sales rep that this current promo doesn’t fit into your budget.

Now, every time a sales rep walks through your door with the latest “limited-time promotion” stay strong and walk away from the “deal” if it doesn’t fit into your plan.  If it does fit into your plan and budget, take advantage of the deal.  Work closely with the sales rep to make sure the ad copy addresses the campaign goals and you’ll be all set.

3 Easy Steps to Creating a Marketing Budget

Setting budgets is so critical to any business, big or small.  But I often see so many small business owners just winging it, not really knowing where all of their money is going.  I’m not an accountant but staying on budget is crucial to my job.  Everything I do is based on a budget.  Without a budget or a plan, a business runs the risk of spending more money than it is taking in or, conversely, not spending enough money to grow the business and compete. We all know that we need to spend money to make money and we want to save as much money on those expenses whenever possible.  But how do you determine how much to spend on marketing your business?

Creating, monitoring and managing a budget does not have to be a scary, overwhelming thing.  Even if you have no accounting experience or if you don’t think you have enough time in a day to do it, it really is imperative that you take the time to do it… and do it well.   It will allow you to allocate resources where they are needed. You simply need to work out what you are likely to earn and spend in the budget period.  Here is an easy 3 step plan for creating a marketing budget that works.

Step 1:

Start by creating budgets for the entire year. Be realistic about your projected sales for the budget period.  If you overestimate, it will cause you problems in the future.   Develop separate budgets for marketing, inventory, payroll, and anything else that you will be required to spend money on.  Continuously check to make sure your budget balances and that your numbers make sense.   

Don’t forget to work in a salary for yourself.  I see this happen all the time, where the business owner sinks so much money into the business that they don’t bother paying themselves. 

Step 2:

To create a marketing budget for the year, set your budget between 5 and 10% of your gross annual sales.  When you think about it, if you only have $100,000 in sales with a marketing budget of 5% that means you only have $5000 to work with for the year. Choose a number that you are comfortable with but a substantial amount of money to achieve all of your marketing objectives.  In step 3, you will need to use your creativity to know where best to allocate those dollars. 

Step 3:

From the budget amount you determined in step 2, develop your individual marketing campaigns for the year.  Determine a budget for each campaign based on the yearly marketing budget you have just set for the company.  Make sure you align your marketing goals and objectives with your campaign planning and spending.  You may need to put more money into marketing activities in one or two months in the year, especially if you’re running a strong campaign or if you run a seasonal business, and less in other months.  Just really take a look at your marketing goals and make sure you’ve budgeted enough money for each of those activities.  If that 5% you allocated in step 2 isn’t enough, go back and adjust your numbers. 

Remember that advertising doesn’t have to cost you a fortune.  Leave the big marketing budgets for the big corporations who have the money to spend on it.

It’s going to take some time to play with your numbers to make everything balance.   That is ultimately the goal… to make sure you’re not in the red.   Stick to your budget as closely as possible, but review and revise it as needed. Remember it’s a plan, a guide to your business finances.  It’s not set in stone, but constant review of it is essential to make sure you know where your business stands.

 

Five Questions to Ask a Marketing Consultant

In our last blog I told you about some of the things you need to have prepared before hiring a marketing consultant. But something else you need to have prepared is a list of questions that you will want to ask a marketing consultant before you sign any contracts.

People are sometimes skeptical of marketer, associated marketing with pushy advertisements.  But marketing is not just advertising so please don’t think of us like a slick, used-car salesman.  It’s very rare that you will encounter a consultant who is greedy and just out to screw you over.  Highly skilled, quality marketers adhere to very strict policies and procedures.

But just to make sure you’re comfortable with the working relationship here is a list of questions you will want to ask.

1.       How will you direct my marketing only to prospective clients so I don’t waste money on reaching the wrong people?

The marketing consultant should ask you what type of customers you want to attract.  You should have a general idea of your target market but the consultant should be able to help you refine it.  With this information the consultant should be able to give you some ideas on how to best reach these people.  Any knowledgeable consultant will give you some ideas during your initial interview but will let you know that your overall communications plan will develop over time, with a plan and a strategy created before any communications are implemented.

2.       What qualifications do you have in marketing and business?

College or university courses alone will not create a competent marketing person.  But it’s at least a step in the right direction.  I personally have both a college diploma in Business Management and a university degree in Marketing Communications.  However, real world experience allows the consultant the opportunity to apply what they learned in school to real situations and to learn what works and what doesn’t.  Your consultant should be able to provide you with a portfolio of work they have completed, including clients you can call for a reference.

3.       Have you ever worked in sales?

Working in sales is the best way to learn how people make buying decisions.  I actually started working when I was 15 years old and almost all of my jobs have been in some sort of sales role.  I have over 20 years of experience in the retail industry, having been a sales associate, a store manager, an area manager and a regional manager.  I have won several awards over the years for my selling and management skills and in the process I learned a lot about people; how they think, how they solve problems and how they make buying decisions.  Hiring a marketing consultant who has an extensive understanding of sales, the selling process and the buying process as well as insight into consumer behaviour is a huge advantage to you when developing your marketing plan.

4.       What is your marketing background?

There are lots of people out there who claim to be a “marketing consultant” or “marketing service provider”.  But let’s make something very clear here.  Marketing is not advertising.  It’s not just about writing a press release or creating a logo.  Nor is it about creating a website or writing a blog.  It’s about developing an overall marketing strategy to work to deliver your core message to your specific intended target market.  Many people understand methods of communication or are very creative and talented in their own industry.  But marketing relies on both the method of communication AND the message.  The most powerful methods are of no value if they deliver a poor marketing message.  So, make sure the consultant you hire has in-depth experience in marketing, not just design.

5.       Besides marketing, in what areas do you consult?

None.  In fact I limit my consulting to a specific type of marketing, a specific type of client and a specific type of relationship.  I specialize in working with small businesses, but not all small businesses.  The clients I help are small business owners with companies that employ less than 100 people and are located in off-the-beaten-path, rural areas of the country.  My clients have very specific needs that are unique to them because of their proximity to (or lack thereof) services often only available in large urban centres.

Marketing has branched out into dozens of sub-specialties.  When looking for a marketing consultant you need to determine if their specialty is right for you.  There are some marketing consultants who say they do it all.  However, they generally have experience working with many types of clients but often not many of any one type.

Asking these few questions will give you a feeling about whether or not this will be a good working relationship.  Remember that when you’re hiring a marketing consultant, this is a relationship you will want to nurture over a long period of time.  As your business grows and changes, your marketing needs will also change, so having a consultant you can trust is vital to the success of your business.

 

Social Media Communication - How to Make it Work for You

This past weekend was our high school reunion.   As part of the celebrations we had the honour of a performance by two of our alumni, Don and Dave Carroll, also known as Sons of Maxwell.

I’ve known Dave personally since our high school days so I always look forward to getting a chance to talk to him whenever he and Don come home.  This year, I didn’t have a chance to talk to him because he was so busy selling his new book, aptly called “United Breaks Guitars”.  Dave’s musical career got an unexpected boost in 2009 when communication between him and United Airlines prompted him to communicate in a new and different way.  This story has been told thousands of times, but I’ll just do a quick recap.  In 2008, Don and Dave and their band mates were travelling to Nebraska for a performance via United Airlines.  United Airlines subsequently broke Dave’s beloved Taylor guitar but refused to help him in any way.  After months of arguing with them, he did what he know how to do best.  He wrote a song.  In fact he wrote 3 songs.  He produced a video for the first one and put it on Youtube.  Not expecting much to happen with it, he was shocked to see how quickly the video (which incidentally had been produced on an almost non-existent budget) was gaining attention.  With the promise to United Airlines that he would write 3 songs, Dave wrote and produced the final 2 songs and posted them on Youtube within several months of the original video.  Since that time, the videos have had 12,310,382 hits, 1,533,940 hits and 533,663 hits respectively.  For the whole story in Dave’s words, visit his website at http://www.davecarrollmusic.com/music/ubg/story/.

Youtube is the most widely used search engine in the world.  Owned by Google, Youtube generates in excess of 2 billion hits every day!!  So, you can only image how Youtube videos can have an impact on your business.  Of course, a lot of Youtube videos are funny animals or babies doing silly things, kind of like “America’s Funniest Home Videos”.  And you do hear of the occasional “discovery” like Justin Bieber, but that’s very rare.  However, it really is possible to use Youtube along with other social media to create a buzz around your company. 

The key to using social media is remembering that you are still communicating with customers.  Social media is not a one-way street.  Our current generation uses social media and text messaging to communicate.  A generation ago, it was the telephone.  Before that it was written letters and telegrams. I’m sure I’m going to offend some people here by saying this, so I apologize in advance.  But here’s my opinion on people who say they are “social media experts”.  That is like saying you’re a “telephone expert”.   Social media is a form of communication and you need to have proper etiquette in that forum the same way you do on the telephone. 

So, when using social media,

·         Be polite
·         Develop 2-way dialogue with your customers and communicate regularly but not to the point of being a pest.  Nobody wants to get overloaded with stuff online the same way people don’t want to get a hundred phone calls from you in a week. 
·         Use appropriate social media sites.  There are so many sites out there but if your customers aren’t using them, why bother?
·         Allow people to get to know you. Show your personality. Dave’s videos show his personality.  Let your personality come through and you too will build a fan base of your own.

We may not all have the YouTube success that Dave Carroll has had, but that doesn’t mean social media won’t work for your business.  Follow the tips I’ve given you and watch your fanbase grow too.

Olympic Style Training for Business

Once again, the Olympics are upon us.  Hopes and dreams of hundreds of athletes are either achieved or shattered.  And all it takes is one mistake or one flawless performance.  Think about how much time and effort these athletes have put into their chosen sport, how dedicated they are, but how unbelievably rewarding it is in the end.

The same can be said about your business.  You can’t expect your business to be successful right out of the gate.  A lot of small business owners start their business with a grandiose idea of what their sales forecast will be for year 1, 2, and 3.  Rarely are those numbers realistic.  Why?  Because as a new business owner, you are absolutely determined that your product or service is the best and everyone needs it. 

Put that into perspective of the Olympic athlete.  When a 10 year competitive athlete says they’re going to make the Olympics one day, they’re generally just brushed off as having a “dream”.  Lots of kids have dreams of making it to the Olympics (that’s their grandiose sales forecast of life), but only a very select few will ever achieve that goal.  But, you can be one of those “kids” who grows up to be an Olympian in your own sport.

You have a business concept that you know is good, just like the kid who know he has an athletic gift.  But what you do with it will determine how far you can take it.  So, what do you need to do?

·         Dedication – If you want to make a name for yourself, dedication is paramount.  How hard are you willing to work?  Olympic athletes train 5+ hours a day, 6 days a week, with a solid focus on the goal they have set for themselves.  You can’t expect to compete in the OIympics by watching from the sidelines.  Nor can you expect to be successful by just sitting around waiting for customers.

·         Key Partnerships – Athletes have built relationships with the top coaches and doctors in the country to ensure that they are in the best possible shape.  Partnerships with carefully selected sponsors helps to fund all the training and travelling involved.  As a business owner, you need to make some very key connections as well.  Develop cross-promotion opportunities with other businesses, practice your communication skills to help you establish connections at networking events, reach out to your customers in a way that makes them feel like you really care.

 

·         Patience and Persistence – Any athlete who has been training for 15+ years has dealt with numerous set-backs.  If you expect to beat out the competition, you’ll need to have lots of patience, knowing that there will inevitably be set-backs and hurdles to deal with.  How you handle those will determine your future.  Handle difficulties with class and patience instead of getting upset and giving up.

So, use the Olympic athletes as inspiration.  Find that Olympian inside you and give it your all.  In time, you will also be basking in the glory of a very successful business.

Direct Marketing - It's Not Just Junk Mail

We have all had “junk” mail appear in our mail boxes.  Well, it’s only junk if it doesn’t interest you.  But that doesn’t mean direct response marketing doesn’t work.  If it didn’t work, nobody would do it.   Similar to sales promotion activities, direct response marketing is designed to encourage immediate action.  Things like catalogues, direct mail flyers, sales or fundraising letters, magazine inserts and statement stuffers.  Even some forms of television can be considered direct marketing.  Things like infomercials and commercials that encourage you to “Buy now!  Just call the toll free number on the screen.  If you call in the next 10 minutes, you’ll receive a free bonus gift!”  Direct marketing is very highly targeted to ensure that the advertiser is reaching only a very specific target market as opposed to mass marketing which attempts to reach a much broader audience.

 

Advantages of Direct Marketing:

·         Allows you to target your message to a very specific audience.   Whatever kind of business you have, you will have defined specific target markets when creating your marketing plan.  Mail-outs can be sent specifically to those people only instead of mass mailing something.  Also, each specific piece can be customized to each person in that target market.

·         You can evaluate its effectiveness. If you compare the number of responses to the number of pieces mailed, you can calculate the response rate. If you include coded coupons or response cards you can keep track of exactly who responded and from where.

·         Mail readers are actively involved.  When people take the time to read their mail, your message will have their undivided attention while they open and scan through it.

Disadvantages of Direct Marketing:

·         Many people don't like unsolicited offers and many are skeptical of their validity.

·         Increasingly, busy people don't even open what they view as "junk mail."

·         Using this method of advertising requires thorough maintenance of mail lists. Many small business owners don't take the time to update their mailing lists. With outdated lists, however, mail goes to undeliverable addresses, which is a waste of money.   Another possible glitch - an inaccurate list may misspell names or address a person who has died. These kinds of errors annoy, or worse yet offend, the recipient.

·         Some groups are concerned about the environmental impact of resources used for advertising mailings.

·         It can be expensive.  When creating a direct marketing campaign, you really need to weigh out the cost differential between producing the materials and the profits earned from any new business the campaign will generate.

Tips on Developing Your Direct Mail Piece

·         Focus on customer benefits and do it right at the beginning. The first sentence (the lead) in a direct mail letter should be about benefits.   Your prospective customer only takes a second or two to decide whether or not to keep reading or to pitch it.  So, make sure the benefits of your product or service are offered right up front.

·         Keep the offer simple, easy to understand and persuasive.

·         Include a "call to action."

·         Ask the customer to "call today."

·         Include a postage-paid reply card.

·         Make the offer for a limited time to encourage prospects to act.

·         Make it easy to respond or place an order. Include order forms if appropriate for your product. Include a:

o   toll-free phone number (24-hour ordering if possible)

o   fax numbers

o   email addresses

o   payment options such as credit cards

o   payment plans for big ticket items

·         Use a personal and friendly writing style. Mail is a one-to-one communication; make it sound that way.

·         Create different direct mail pieces to address different audiences - even when you're offering the same product. Your product or service may have a different benefit for different target markets. So, create multiple forms of the same offer for those different audiences.

·         Consider making your mailing "3D" by including an object in the envelope that will peak the recipient's curiosity.

Mailing List Options:

Mailing lists are available for purchase, but they can be quite costly, especially for small businesses on a tight budget.  A better option is to use your house list.  That means that you really need to be diligent about obtaining information from your current customers and people who have inquired about your product or service in the past and maintaining it.  Keep your mailing list current by periodically asking your customers for their current mailing address.

Success Measurements:

When you include coded coupons or response cards, you can track how many you have received and where they came from.  Direct mail experts tell clients to expect anywhere between a .05 percent and 1 percent response rate.  That means that if you mailed out 1,000 direct mail pieces, expect to receive about 10 responses.  That might not sound like a lot, but it’s better to receive 10 actual sales, than 500 “maybes” that you could be chasing down forever.  So, don’t increase the number of mail outs just to increase your response rate.  The quality of the response is what’s important.

What is Sales Promotion?

So far I’ve covered the importance of your company website, public relations and an overview of the marketing wheel.  In today’s post, I want to educate you on what sales promotion is.  Time and time again, I hear people say “advertising” when they really mean “sales promotion”.  The two terms are often confused with each other but they are not the same thing.

Sales promotion is used as a short term technique to persuade customers to make a quick purchase.  These are things like:

·         coupons

·         buy one get one free deals

·         giveaways

·         free events such as workshops

·         loyalty programs

·         buy now – pay later plans

·         free samples

This is just a short list of the things that you can do to incorporate sales promotion into your marketing plan, but it gives you an idea of what sales promotion is to begin with.

Advantages of sales promotion:

Price competition – One of the advantages of sales promotion for small business owners is that you can significantly lower the price of a product (at least temporarily) that is in direct competition with a larger retailer.  This in turn can drive traffic into your store, hopefully turning these new customers into permanent customers.

Encourages repeat purchases – Things like loyalty programs can encourage repeat purchases.  We’ve all been to a coffee shop or sandwich place that gives you a card where they punch it every time you purchase something.  Then after you’ve purchased 10 coffees you get one free.  That free one at the end kept you coming back, didn’t it?!

Entices new customers – As a small business owner, it’s often more difficult to make customers aware of your product or company since you don’t have a massive advertising budget.  But people always want something that is going to provide a benefit to them, so if they are going to get something for free, they are more likely to come to your store, instead of going down the street to your competitor.

Disadvantages of sales promotion:

Short-lived – The biggest disadvantage of sales promotion is that it doesn’t develop brand loyalty.  It is intended to generate immediate, short-term results.

Price Sensitivity – If sales promotions are done too frequently, customers will come to expect great deals all the time.  In this case, they will just wait until you have another promotion before purchasing the product.  Promotions are great tools, but do them infrequently.  Otherwise, you’re losing out on sales of regular priced items and losing profit.

Quality image may be compromised – When you heavily discount a product, customers may think that the product isn’t selling, so there must be something wrong with it.  For that reason, sales promotions need to be used sparingly, especially in businesses where quality and image are important to their marketing strategy.

So, definitely incorporate sales promotional activities into your marketing plan.  Plan them out to coincide with your other campaigns, but don’t do too many of them.  Remember that sales promotion is not advertising… it’s a tool that is used to generate quick, short term activity.

For help planning your sales promotion activities, contact us at info@s-b-m-s.ca.

Do You Know Your Numbers?

So, how many small business owners think about developing an accurate budget?  We all know that we need to spend money to make money and we want to save as much money on those expenses whenever possible.  But do you know how much you actually have available to spend in the first place? 

Estimating and matching expenses to revenue (real or anticipated) is important because it helps small business owners to determine whether they have enough money to fund operations, expand the business as well as generate income for themselves. Without a budget or a plan, a business runs the risk of spending more money than it is taking in or, conversely, not spending enough money to grow the business and compete.

The budgeting process is a key part of running a business successfully. It provides an opportunity for management to thoroughly review progress and to set objectives.  The budget is also a living document which needs to be continuously reviewed in light of the business environment and actual performance. In addition, formal reviews should be done on a quarterly basis. This gives business owners a chance to see what’s really going on their business.   

Benefits of a business budget

There are a number of benefits of drawing up a business budget, including being better able to:

·         manage your money effectively

·         allocate appropriate resources to projects

·         monitor performance

·         meet your objectives

·         improve decision-making

·         identify problems before they occur - such as the need to raise finance or cashflow     difficulties

·         plan for the future

·         increase staff motivation

Okay.  So, now you know why it’s so important to have a budget, but do you know where to start when making one that works?

Creating a budget

Creating, monitoring and managing a budget is key to business success. It helps you allocate resources where they are needed, and it does not to be complicated. You simply need to work out what you are likely to earn and spend in the budget period.  The key here is determine a budget for each item that you need to spend money on; marketing, inventory, payroll, rent and utilities, office expenses.  Everything. 

Start preparing your budget two to three months before the start of a new financial year.

Begin by asking these questions:

1.                   What are the projected sales for the budget period? Be realistic - if you overestimate, it will cause you problems in the future.

2.                   What are the direct costs of sales - ie costs of materials, components or subcontractors to make the product or supply the service?

3.                   What are the fixed costs or overheads? Break down the fixed costs and overheads (the costs that are beyond your control) by type, for example:

•             cost rent or mortgage

•             payroll costs - pay, benefits, etc.

•             utilities - heating, lighting, telephone, internet, etc.

•             vehicle expenses

•             equipment costs  

•             legal and professional costs, including insurance

Your business may have different types of fixed expenses, and you may need to sub-divide these into smaller categories. Don’t forget to work in a salary for yourself.  I this happen all the time, where business owner sink so much money into the business that they don’t bother paying themselves. 

Now you need to figure out your variable expenses, the things you can control.  Things like marketing, travel costs, office expenses, etc.  Decide how much you want to be able to spend on these things throughout the year, based on the funds available.  Once you have figures for income and expenditure, you can work out how much money you're making. You can look at your costs and work out ways to reduce them. You should also be able to spot if you are likely to have cashflow problems - giving you time to do something about them. 

It’s going to take some time to play with your numbers to make everything balance.   That is ultimately the goal… to make sure you’re not in the red.  But taking the time to really dig into your business’ finances is a measure of control all business owners need to have.  Stick to your budget as closely as possible, but review and revise it as needed. Remember it’s a plan, a guide to your business finances.  It’s not set in stone, but constant review of it is essential to make sure you know where your business stands.

Is It Just a Dream or an Actual Goal?

With the new year upon us, everyone is making New Year’s resolutions… lose weight, get out of debt, stop smoking.  Personal goals are important, but what about your business goals?  Every business owner has dreams of what they want to achieve, but unless you have a plan in place, those dreams will never become a reality.

Running a business requires a great deal of planning.  My husband laughs at me because I am the queen of lists and schedules, but that’s just the way my brain works.  But it’s a good thing I’m wired that way.  That’s what keeps me so organized with all of the marketing activities going on with my own business as well as my clients’.  Make your calendar your absolute best friend.  Here is what I do for myself and for my clients.

Plan things out on a yearly, monthly, weekly and daily basis.  Start off by setting some goals you would like to achieve for the year.  Maybe you want to see a 10% increase in sales this year.  Maybe you want to get your book published by end of the year.  How are you going to achieve that? By doing things on a daily, weekly and monthly basis until you’ve achieved what you set for yourself, that’s how.

Whatever your goal is, make sure it’s a SMART goal.  Most people are familiar with SMART goals, but here’s a quick refresher.  First, it needs to be SPECIFIC.  Don’t just say you want to increase sales (everyone wants that!).  How much do you want to increase it by?  Next, make sure your goal is MEASURABLE.  If you don’t have a plan in place to track and measure your results, you will never know how close or how far you are from achieving it.  Is it ATTAINABLE?  Make sure the goal you have set is actually REALISTIC.  Good for you that you want to increase sales, but if you’ve decided you want to increase sales by 200%, you might likely be setting yourself up for failure.  And finally, make sure you have a TIMELINE.  By setting a timeline, you are essentially giving yourself a deadline.  That makes your plan an actual goal, not just a dream. 

By building tasks into your daily, weekly and monthly schedules that are geared around your goals, you can achieve your goals slowly and systematically.  Schedule every hour of your day and follow your schedule.  If your personal goal is to lose 100 pounds this year, you’re going to need to follow a strict schedule of workouts and planned eating.  Your business is no different.  If you want to see success you need to build it into your schedule every single day.  So, get that calendar out and start using it.  I want you to achieve all of your goals this year!!  Happy New Year everyone!