How Much Should You Spend? My answer may surprise you.

Actually if you know me at all, my answer shouldn’t surprise you at all. So let me get my answer out there right now. How much should you spend on advertising and marketing? Probably, more than you are spending now. If you own a small business, you are notorious under-spenders on advertising and marketing. I actually don’t blame you. This is because small business owners usually have limited resources. With limited resources, expenditures that don’t appear to be critical on the surface are going to get a low priority. Further, much of the advertising and marketing done by small businesses…well it sucks to be frank.

That is largely because you are trying to do it yourself. If that is the case, you might as well not spend any money on it, unless, of course, you own an advertising or marketing firm. You need help to do it right. So here are some steps you can take that may help you get your advertising and marketing on track.

Step #1 – Determine an Amount to Budget – You need to figure out how much you can afford to spend. Understand that good advertising and marketing SHOULD bring you new customers and cause your existing customers to refer you more new customers. It’s an investment, but one that should have a return, and should always keep that return in mind. You may wish to contact industry organizations you belong to or may exist. They often have data that can provide recommended spend amounts, usually as a % of revenue. I hate rules of thumb, but if you are budgeting 1 or 2% of your revenue, it likely isn’t going to be enough. Try 5% of revenue as a start.

Step #2 – Hire Good People to Help You – Once you armed with a budget, you need to get the right people on board. The right people will talk to you about return on your investment. The right people will understand the lifetime value of a customer. The right people understand that an important part of marketing is how you talk to your existing customers, because it is likely they are the best resource for new customers for you. The right people will LISTEN. If they come in to your first meeting with a solution, don’t hire them.

Step #3 – Develop a Strategic Advertising & Marketing PLAN – Whatever you end up doing, it has to fit together. The message must be compelling and it must be consistent throughout all of your communications.  People are bombarded with sales messages all day and night. Your message should be memorable and something you can deliver on. When you have a written plan, you are much less likely to mess this up.

Step #4 – You Need to Be Involved – You need to provide your expertise to the process. One weakness an advertising or marketing person can have is a lack of expertise about your industry.  They often obtain that expertise by doing market research. That can be expensive. That doesn’t mean you don’t do it, but in some ways you are paying them to learn about your industry.  You can be an excellent resource to the process by providing your knowledge of the industry. It will also help make the message you send more targeted at the intended recipient, because you have valuable information about the profile of that person/business.

Step #5 – You Have to Keep the Message Out There – There is a reason that advertising folks refer to advertising efforts as “campaigns.” This is because people will very likely not respond to your message the first time they see or hear it. Your plan must be repeated, often several times before a prospect will respond. I once had a great idea about a special service my former firm could provide for clients. I devised a compelling letter to send to clients that I thought was irresistible. We sent it out specifically to clients we KNEW would benefit from the service. It was a no brainer…from my perspective.  So off went the letter and I just waited for the flood of responses.  We ended up with 2 or 3.  And this was from EXISTING clients. This was because the letter was the only thing we did to market this service. We didn’t do nearly enough to prompt them to act.  Lesson learned.

Step #6 – See What Works and Repeat It – If a particular campaign works, repeat it. Again and again.  Until it stops working. If a campaign gets little or no response after a few touches, change it. Success with a small business budget is hard – don’t ignore even modest success. If you are getting a positive response, you are on to something. You may need to tweak it but stick with it.

Step #7 – Ignore the Web at Your Peril – If your web presence is not a part of your marketing and advertising efforts, you are living in 1995. Prospects who hear about you, get a referral for you or see your ads or marketing efforts are absolutely going to go check out your website. Best you have one and best that website be something a prospect would want to see when they get there.  I don’t know what that its, but you can easily snatch defeat from the hands of victory with a poor or non-existent web presence.

Mark Forrester and Lance Cummins are trusted colleagues.  Much I have learned about advertising and marketing I learned from them. They get my unqualified recommendation to help you with your advertising/marketing/web efforts. I’m also a huge fan of Steve Dubin at PR Works and Glenn Anderson at Viamark. I’ll be happy to connect you – just drop me a line or call.

• Too long;
• Impersonal;
• To have vague choices;
• To have a lot of non-applicable questions;
• Too long

My personal belief is that for most businesses, a good survey can be done in 5 questions. It is also my belief that any survey you may do must be kept to less than 10. I think the tendency is to break the service/product experience down into individual processes within the sales cycle and all possible uses of the service/product. You just won’t get buy-in on completing the survey accurately this way.What you should want to find out is this: 

1. Whether the service/product exceeds, meets or was below expectations;
2. The likeliness that the customer will return to buy again;
3. The likeliness that the customer will refer other people to your business;
4. What they liked most about the service/product; and
5. What was the ONE THING they would change about the experience of dealing with your business.

There, pretty much, is your 5 Question Survey. You can word the survey however you like. The 1st 3 questions can be multiple answers, a rating scale of 1-10, whatever you feel works best. The last 2 questions are designed to be open ended. You are looking for the customer to tell you what they liked most about the experience of dealing with your business, and you want them to tell you what one thing they would change if they could. And you want this in THEIR WORDS. This is incredibly valuable information. You will be finding out what is important to your customers and you will be finding out if there is something that bothers them. You start hearing the same answers to any of these 5 survey questions across a large number of surveys, and you’ll know exactly what you need to work on…and isn’t that what a survey should cause to occur?

In my previous post I asked the ultimate business question:

Why do your customers buy from you? Too many business owners do not have an answer to that question that is compelling. Things like great service, great quality, fast shipping may give you a leg up on your competition, but don’t you want to destroy them?  Better said, don’t you want to do better than you’re doing right now?  If the answer to the ultimate business question is obvious, then you’ve done your job and it is likely that business is great – or at the very least, better than your competition. I’m guessing for most there is room for improvement.

I promised to give you some ways to improve on your answer to the ultimate business question and here is #1:

Have an incredible offer for your customers

Obviously it isn’t easy but think about it.  What you offer to your customer, is it with the usual terms, the usual quality, the usual promises? An incredible offer doesn’t and probably shouldn’t mean an incredible price. That is a losing proposition and frankly easily imitable by your competition.  It may require work on your product, your service, your delivery or some combination of all the factors, but if you can offer something that is meaningful to your customers that they aren’t getting anywhere else, what an advantage!

One of my favorite business books of all time is The Irresistible Offer by Mark Joyner.  Mark says, and I agree, that at the core of all business is the offer: “You give me x and I’ll give you y.” If you can make your “y” seem so overwhelmingly worth the x, you’ll be able to print money.

Joyner says that to have an irresistible offer, it must have 3 components:

1.       A high return on investment. Your customer needs to feel a real value is present.

2.       A touchstone. Something easy to understand and memorable. Joyner references  perhaps the most powerful touchstone in American business history to make his point. 30 minutes or less or it’s free was the touchstone that took Domino’s Pizza from a local chain to a worldwide pizza phenomenon.  Joyner further proves the power of the touchstone by pointing out something that was true of Dominos during the explosive period of growth: The pizza sucked. But Dominos understood that fast pizza is good pizza and possibly free pizza is even better.

3.       Believability. It must be realistic to the customer. Did Dominos give free pizza away?  Absolutely but at a rate that was financially negligible.  What they did was improve their system to assure that they could meet the time demand.

So developing an offer is not an overnight process. It may require some fundamental changes to how you operate. And you need to spend some time in figuring out how you will present it to your customer base so that they truly believe they have to at least try what you are offering. If you aren’t already doing it, you should be surveying your customers.  Beyond all of the valuable feedback you get about what you’ve already done for them, looking at their comments should give you some valuable market research into what they really want from you.  Your offer should speak to their most valued desires. You may need to test it, tweak it and practice it. Anything of value should take some hard work but the payoff of truly considering your offer in a serious fashion may be just what your business has needed.

Why do customers buy from you?  How cool would it be to answer: “Just look at what we offer our customers – they simply can’t resist us!”

I base a lot of the consulting I do on simple principles which then are applied  with specificity to the particular client.  I have 10 that I work with on a regular basis.  Well, 10-10-10 was last year so that doesn’t really work today.  But I think I can come up with an 11th for the sake of this post, but you’ll have to wait to the end to know what it is.  I’ll say just a few words about each principle as I will be expanding on each in detail as the weeks go on.  Here are the 11:

1. You must have a compelling offer – At the root of all business is the idea that you sell something for a price. Is your offer to customers compelling? If not, think about getting one.
2. You must communicate with customers constantly – Want referrals? Want to keep the customers you have? Communicate with them all the time and you’ll get what you want.
3. You must have a referral system – It isn’t enough to ask for them. It’s about how you ask for them, being sure you do it consistently and at the right time.
4. You must survey your customers – This includes asking in person and passively. Not all customers will tell you what they really think to your face.
5. You must have documented systems – The best way to have effective products and services delivered efficiently, is to have everyone doing it the way that is best…every time.
6. You must open your monthly bank statement – This is one financial move you don’t offload. Open the statement, ask questions and follow up and you’ll be doing a lot to prevent theft.
7. You must know your customer lifetime value – How much is each customer worth to you? When you know it, you’ll do a lot more to keep them and market much more aggressively to get them.
8. You must know the highest and best use of your time – For sure it isn’t working the cash register or doing the books. If someone can do it 80% as well as you can, let them do it!
9. You must have a problem resolution program – When mistakes happen, everyone in your business should know what to do, and it should be impressive.
10. You must have an advisory board – Either formally or informally, you must collaborate with others to help you solve your business challenges. You simply must have people to advise you.
11. You must implement – That’s a great business plan. Would have been nice if you implemented it. Failure to implement is why most businesses fail to achieve their objectives.

So there are the 11. The difference between success and failure usually lies in maximizing the value that the ownership brings to the table.  Owners must create leverage with their time. Managing their own time, those of their key people and having everyone on the same page is critical to success.  By sticking to these principles and having laser-like focus to them can bring about the results you desire.

Happy 11-11-11 to all but particularly to our brave folks in uniform. You are the reason we have the freedom and liberty to succeed. You’ll always be loved.

Larry

1) The granola bar at Whole Foods in Dedham;

2) The Maryland rub chicken wings at Pizzings in Marshfield;

3) The service department at Dave Delaney’s Columbia GMC Buick in Hanover;

4) The flowers (to send as gifts) at Awesome Blossom in Pembroke;

5) My travel agent, Paula Killion of the Travel Center in Holbrook.

I know, ‘big deal.’ Well actually it is a big deal because, with the exception of Whole Foods, none of the above are located within 10 miles of me while several of their competitors are.  But who gets the business from me? The one who serves me so well that I consider it to be worth my time to get in my car and travel to those businesses to enjoy their high quality products or services.  Price is not that important when the service is that good. In the case of Paula Killion, my travel agent, I not only get outstanding service, but I usually get it at a price that beats what you pay online (Yes, you are paying more to screw around on the Internet for your travel, particularly when an experienced travel agent with the right relationships gets better pricing).

I’m going to keep the message of this post simple by asking a few questions:

Do you have customers who are FANS of your business?  Do they come to only you?  Do they trumpet to others the joy and happiness you bring to them by serving them?

If you don’t have fans, you should. And if you don’t, it means you need to do something to start earning fans. A lack of fans is a sure sign that you have a business with huge potential. If you have fans, you need to figure out how to get them singing your praises. We’re going to expand on this in further posts but for now really think about the fans or lack thereof for your business. And let’s get to do something about it.

In 1973 I read the book Jaws by Peter Benchley.  1973 was two years before the movie based on the book hit theaters. I was 13 at the time and living in Michigan, a solid 700 miles from the nearest maneater lurking off the shores of Massachusetts. That did not stop me from having misgivings about swimming anywhere that my feet could not touch the bottom. This made me a lot of fun to mess with in the deep end of friends’ swimming pools.

Subtly behind that fear was a sort of fascination with the idea that somehing so big existed and would consider me a meal if the opportunity existed.

When the Discovery Channel started broadcasting Shark Week, I could not help myself. Over the years, this fascination has turned to appreciation for the Great White Shark. It doesn’t have ill intent, it isn’t evil, it is just doing what a shark must do to survive. When it comes to hunting, they do it in the most efficient manner possible. That many shark attacks appear to be of the sneak attack kind is really just a function of the fact that the shark is looking to preserve itself. It has learned that simply swimming up to expecting prey is going to necessarily cause thrashing around that could be injurious to the shark.  That picture on the cover of Jaws with a shark speeding vertically toward the swimmer is in fact accurate with regard to how sharks attack. The movies depiction of the attack on Chrissie, the girl swimmer isn’t, but that’s Hollywood for you. I particularly like the part where Chrissie is gliding across the water toward the buoy as if the shark is playing with her before he eats her.

Swimming in the open ocean is not an option

I’m not sure there is a strong business message in Shark Week. If I had to identify one, it is to have appreciation for the fact that these animals work efficiently. Most are incapable of emotion, most have brain function only a fraction of ours, yet they get the job done, because they had better stay focused on the job at hand or they won’t be around tomorrow. Think about your survival and more things will get done.  Don’t act out of fear – that is a devasating emotion for the sake of business grwoth and progress. But just think about the highest and best use of your time as an essential activity to your survival as a business.

I’ll admit is, the videos of Great Whites flinging themselves out of the water to go after a seal really creeps me out.

It also caused the retirement of my black swim shorts.  I’m just saying.

Larry

This will start a series of what I call “First Team Moves.” The starters on a football team are often called “the first team.” They are the best players on the team, and often they got there by exemplifying leadership, grit, determination, etc. to make the team better. So I’m going to call moves/strategies that exemplify those same things in a small business “First Team Moves.” To start things off we’re going to talk about the First Team Move of thanking any and all of those who refer you business.

We all know that the best way to get referrals is to give them. Nothing says “I’d like a referral” better than to give one to the person you’d like a referral from.  The best way to thank someone for a referral is to provide one back. Quid pro quo in the referral game is where it is at.

Now that we have established that, let’s go to the second best way to get a second referral from a source.

You thank them.

Seems easy but how do you do that?

Creatively and sincerely.  There are no limits to the number of ways we can thank a referral source.

• A call
• A note

These work well but they are not that difficult to forget.

Try out a few of these ideas to thank your referral source:

• Have the person who became your customer as a result of the referral thank them. Imagine how it would feel to hear not just from the person you gave a referral to, but also that referral?  You’d sure be looking to do it again because they clearly made you look good.
• Give them something inexpensive but meaningful. If you know anything about them, use that information to give them a token of appreciation.  They love golf? Get them a sleeve of good golf balls. If your gift is unique but usable, you won’t be forgotten.
• Ask them to contribute to your newsletter, blog, speak at an event you sponsor, that type of thing. Even if they don’t want to do any of those things, they’ll certainly appreciate the offer.
• Another thing would be to ask them. “Hey Bob, I know the best way to thank you for referring Shannon to my business is to get you a referral. Believe me I am looking, but in the meantime, is there anyone you’d like to meet? Maybe I can help you with a business challenge? I’m trying to be specific Bob because I want to show you that I don’t take your referrals lightly.”

You can’t truly succeed in small business without mastering the referral game.  Do that and you’ll stay on The First Team!

Larry