As small business owners prepare to spend more on marketing this year, they should observe a few tips to make smart use of their dollars. Regular and repetitive marketing to a niche market, developing a consistent brand and co-marketing with other small businesses are some of the strategies they should consider. See the following article from The Street for more on this.
Small businesses suffered in the recession, but, according to a recent FedEx(FDX) poll, their owners remain optimistic.
In fact, 72% of the small-business owners polled in the shipping company’s Signs of the Times survey said they will be the driving force behind the U.S. economic recovery this year. In addition, 42% of those polled said they were planning on spending more money on marketing and sales initiatives this year.
They should be cautious, though. Here are the common ways in which small businesses mismanage their marketing money.
Spending the Entire Marketing Budget on Week One: More often than not, small businesses will pour tons of startup capital into their marketing campaigns at launch. While there’s logic to this (how will you attract customers if no one knows you’re out there?), business owners who spend their entire marketing budget on a launch set themselves up to fail in the long run. Why? Because marketing is a never-ending process. You can’t stop advertising once the money runs it. Well, you can, but that would be a waste of the capital you spent.
“People see and receive so much advertising that the one-time marketing tactic is no longer effective,” says Peter Geisheker, chief executive of The Geisheker Group Marketing firm. “A prospective customer may need to see your advertisement seven to 12 times or more over a period of several months or even a year before they will buy from you.”
In addition, once you get them in the door, you’ll have to work to keep them there. Take large companies, like Wal-Mart(WMT) or McDonald’s(MCD), which have already established brand loyalty, but haven’t ceased all ad campaigns. They know that marketing is not a one-off; out of sight means out of mind. Of course, small businesses don’t generate the cash flow that giant corporations do. However, small establishments can afford protracted advertising. They just need to identify their target audience.
“Instead of trying to market to the world, select a niche market and market to the same group of prospective customers every month,” Geisheker says. “It is marketing repetition that builds trust and brand loyalty so only market to a group of people or businesses that you can afford.”
Inconsistent Branding: Establishing your target audience is part of branding your business’s identity. One of the biggest mistakes small-business owners make is that they launch advertising campaigns before this identity has been adequately established. People aren’t going to give you their patronage if they don’t know what it is you are selling. Inconsistent branding gives the impression that you’re not sure about your product either.
“Developing a consistent brand is not just for big companies,” says Nick Labran of Helenick Consulting. “Your brand is your identity. It’s who you are.”
Small businesses often fall prey to brand conflict when they can’t decide on a company name or logo. What appears on a Facebook page may not match what’s on the company business cards. Mailers that go out one month may look nothing like the newsletter that goes out the next. According Labran, having an inconsistent brand is “the same as introducing yourself to every person you meet with a different name.” No one is going to remember you, and, with brand loyalty hinging on repetition and consistency, you’re essentially going nowhere fast.
The small businesses who make the most out of their advertising budget are the ones who know who they are and who they are marketing to before they spend a cent.
Inability to Measure Results: What works for one business isn’t always going to work for another and, sadly, some of your marketing attempts will fail. This is not the end of the world (or your business) if you’re paying attention. However, business owners who forget to measure the results of their advertising campaigns will invariably end up in the red.
“Small businesses get excited with all the bells and whistles that marketing can generate,” says Thomas Vanderbilt of Vanderbilt Communications, adding “activity doesn’t translate into revenue or even better profit.”
Business owners need to be aware of how much an advertising campaign costs versus how much it brings in. Measuring what marketing campaigns actually financially benefit your business will prevent you from wasting money in the future. Ways of doing this are also varied, but there are tools out there.
“In my business, we spend much of our money on lead generation,” says Alex Gramling, vice president of marketing for Locum Leaders, a small medical staffing company. “We measure cost-per-click and cost-per-lead, using free analytic tools from Google(GOOG), and then we adjust our spending relative to our goals and budget.”
Acting Like a Marketing Expert: If establishing a consistent brand and identifying a target audience intimidates you or you haven’t the slightest clue how to measure your marketing efforts, consider seeking outside help. According to Vanderbilt, “marketing is a science with proven results that should deliver revenue.” The business owner who thinks he or she is suddenly a marketing expert is essentially electing to fly blind. Not to mention they have enough on their plate already.
“I tried to do the promotion and marketing for my first self-published book and lost book-launch momentum because I was trying to do everything myself,” says author Donn Levie. He adds that small-business owners should hire experts to do their promotion and marketing so that they, in turn, can focus on what they do best.
If you are hesitant to hire a consulting firm, you need to at least do your research. Study other small businesses in your area to see what type of promotions they’ve run successfully in the past. Consider establishing partnerships with these businesses and engage in co-marketing activities so you can gauge your shared target audience.
“Find the business you most admire and study their tactics and techniques,” Vanderbilt says. “Figure out how to adapt them to your situation. Learn from their mistakes and seize opportunities.”
This article has been republished from The Street. You can also view this article at The Street, an investment news and analysis site.