Why Is Marketing Important? Let's start with a definition of marketing for small business owners. For business owners, marketing is a system that has three main functions: • Creating awareness • Getting new customers to try your product or service • Getting your customers to spend more
Creating Awareness • Creating awareness for your business can be costly. • Awareness is measured by how well your prospective customers know that your product or service is available. • Measuring changes in your customer base's awareness is difficult and costly to monitor over time. Therefore this is not an area for small business owners to focus on intently.
Getting New Customers to Try Your Product or Service • Every business needs new customers. Each year you will have some attrition or erosion of your customer base. • Customers quit doing business with companies for five main reasons:
5 main reasons: • 4% will move, transfer, quit their job, get promoted, or die. • 5% will patronize a different business on the recommendation of someone else. • 9% change because your competition offers a better benefit than you do. • 14% change because they are unhappy with the results of the product or service you're providing.
5 main reasons: • 68% change because someone inside your company has expressed a lack of caring. In most instances, this is caused by little or no contact, indifference, missed deadlines, or budget overruns
The Facts: • What you can see from the list is that each year you'll need to replace some customers, or eventually you will not have any. • Let's look at some marketing methods that work well for getting new customers to try your product or service.
The three most effective are… • free trials • guarantees • word-of-mouth marketing
Free Trials • Here's an example of how a free trial can work to generate new customers. • Kashi is a natural foods company that makes whole grain food products. • When Kashi introduced a new granola bar, they offered new customers the opportunity to order a free sample. • Kashi then began a relationship with the consumers who ordered the free granola bar.
Can you think of some examples… • What companies you know of that gives free trials?
Apply to your business! • You can create a similar free trial method for your own business. • The key is to establish some form of contact with the customers who take advantage of your offer, whether it's a street address, an e-mail address, or a telephone number.
Guarantees The next method, a guarantee, can be a powerful marketing tool. • Potential customers might be reluctant to try your product or service because of perceived risk. • What if they make the wrong decision? • What if they lose money or don't feel they got what they paid for?
Guarantees • Offer a guarantee that reduces or eliminates your customers' perceived risk. Then they'll feel more confident about considering your product or service. You give them a reason to buy today without the risk of regretting it tomorrow.
Can you think of some examples… • What companies you know of that gives guarantees?
Word of Mouth • One of the most successful word-of-mouth campaigns was conducted by Google, when it launched its Gmail feature. Google made a Gmail account available only to its power users, who could then extend a personal invitation to others to sign up. • This quickly generated a word-of-mouth buzz, an intense interaction among potential customers. Since a Gmail account was hard to get, people salivated over them.
Can you think of some examples… • What companies you know uses word of mouth?
Apply to your business! • Small business owners can create their own buzz. What you're aiming for is a core group of customers who will promote or give testimonials about your product or service.
Venues You have many media venues available to generate buzz: • Face-to-face communication • Telephone calls • Web sites (including blogs and message boards) Example? • E-mail messages • Text messages and instant messages
Venues • No matter what medium you use for creating buzz about your business, the goal is the same. • You want your existing customers to spread positive information and recommendations to help create new customers.
Getting Customers to Spend More • Not only do you want customers to spend money with you the first time, but you want them to come back again and again. • It can be based on the number of people on your customer list. You'll make more money over time by marketing to your current list of customers than you will by always trying to find new customers. • Existing customers will spend more with you if given the chance.
Market Tactics A couple of marketing tactics that work well to entice existing customers. • cross-selling • up-selling.
Effective Marketing Tactics Cross-selling and up-selling can be very effective marketing tactics to get people to spend more money with you.
cross-selling • allows you to offer similar products or services to your customers that are like ones they have purchased in the past.
Can you think of some examples… • What companies you know who uses cross selling?
cross-selling Amazon.com For example, if in the past a customer has purchased a book on investing, the bookstore owner might try to sell that same customer the new version of the book when it comes out.
up-selling • When you up-sell, you offer additional products and services at the time a customer is making a purchase.
Think about the last time you ordered a hamburger at McDonald's. I can almost guarantee you were asked, "Do you want fries with that?“ • McDonald's up-sells its other products at the same time their customers are ordering hamburgers.
Can you think of some examples… • What companies you know who uses up selling?
Marketing Touch Points • Nearly every aspect of your business is connected to marketing. • Those aspects of your business that directly impact your customers are called marketing touch points.
Marketing Touch Points • Product quality • Speed of service • Advertising • Location • Customer service • Business cards • On-hold and voice mail messages • Employee appearance • Web site content and appearance • Credit and collections department attitudes
Marketing Touch Points • Each of these areas will have a direct impact on whether a customer will purchase from you the first time and whether they will purchase again. • When creating your marketing plan, be sure to carefully examine all the different places where customers interact with your company. Plan and design them to have the greatest positive influence on your customers.
direct response marketing • Direct response marketing is different from other types of marketing because results can be tracked and measured. • You, as a small business owner, must use this type of marketing in all your advertising because you cannot afford to continue marketing campaigns that aren't returning an appropriate amount of sales.
direct response marketing A great example of direct marketing is a grocery store coupon. When a coupon is redeemed at the store, the company that issued the coupon can track how many were used to purchase a particular product. The industry term for the number of coupons collected is the response.
ideas on how you can use direct response techniques • Have customers bring in a postcard for a free item or a percent discount off one item in your store. • Host a customer-only private event for customers that come with a secret saying or password. • Offer a bigger discount if customers bring in a friend. • Advertise in the newspaper a special sale and include a discount coupon. • In your yellow pages ad, offer customers a free item if they tell you how they heard about your company.
Tracking Basics • Now that you know the importance of testing and tracking, let's talk more about what you should be tracking with your different marketing campaigns. • The best way to track your marketing campaigns is to create a spreadsheet system.
ideas on how you can use direct response techniques • In your yellow pages ad, offer customers a free item if they tell you how they heard about your company. All of these examples allow you to track the effectiveness of your marketing campaign.
Here is a great example: of how a furnace company got more business even though its price was the same as what other companies advertised. • A customer was looking for a special offer to have the furnace checked. Furnace company ads in most of the newspapers advertised a special rate of $89. • But then the customer receive a postcard in the mail that offered a free $20 Target gift card if customer ordered the furnace cleaning at $109.
The bottom line of all the offers was the same, but the second offer with the free Target gift card was irresistible. • Further, the response was so great that customers could not get an appointment for 10 days. • This is an excellent example of how effective direct response can be to your business. The furnace company could track and measure the response. At the same time, it benefited from a unique offer that generated many new customers.
The Statistics • When you send an offer to prospects, typical response rates, according to the Direct Marketing Association, are from 0.5% to 1%. • This means for every 100 pieces of mail (or e-mail) you send, fewer than one will act on your offer. • If you are sending a marketing piece to existing customers, you will receive an approximate 2% to 3% response rate.
The truth • These tiny response rates force small business owners to watch the cost of marketing campaigns very closely. • But even though the response rates are minuscule, they are much better than not knowing which ads are producing results for you.
Let's examine the categories • Description of campaign: Your marketing campaigns might use postcards, sales letters, yellow pages advertising, newspaper ads, telemarketing, or e-mailing. • List used: If you marketed directly to a list of people, did you send your offer to your own list, a portion of your own list, or a purchased list?
the categories • How sent: How did you send the campaign—by e-mail, first-class mail, or bulk mail? • Date sent: When did you start the campaign? This allows you to see if there is any seasonality in your response. • Leads received: How many new customers did you add to your list?