Inside Small Business | Small Business & Home Business Marketing

Top Five Cost Effective Marketing Strategies

By Scott Barnett, President of Art & Science of Marketing

Marketing is a struggle for many businesses. Off-target messages are communicated to poorly defined audiences, with little revenue resulting from the time and money expended.

The struggle comes from not understanding the critical distinction between marketing and marketing communications — marketing being the process of creating and keeping customers; marketing communications being just one of the tools to be used once you have developed sound marketing strategies.

Putting communications ahead of marketing strategy is a “ready, fire, aim� approach that will fail more often than not. Yet “ready, fire, aim� is what many businesses do.

How can businesses best promote themselves and avoid costly misfires? Here are a number of high impact marketing strategies that will help you to create and keep more customers.

Tune in to the buying behaviors of customers. Customers have logical and emotional reasons for selecting among competitive product and service offerings. To fine-tune your marketing strategy determine: how customers perceive the value of your product; how involved they are with your product; and, how strongly they feel about it. With this information you can definitively pinpoint why people do or don’t do business with you. Talk to customers about:

• The value they perceive in your product in terms of: uniqueness; quality; price/performance; convenience; return on investment
• Their involvement with your product category in terms of: extent of their knowledge; impact of your product on their business or lifestyle; willingness to recommend your product to others
• Their emotional ties to you such as: friendly relationships; feelings of loyalty; image; personal identification with your business

It’s amazing what you can accomplish when you truly tune in to customers. I once helped a company with sharply declining sales to spark a turnaround. Customers told us that the company ranked low in many ways: it wasn’t unique; the price/performance ratio was inferior; they did not have a strong sense of loyalty or willingness to recommend, etc. This information, while difficult for management to swallow, provided the insight needed to revive the company. If you are uncomfortable talking with customers about these important issues, hire a third party to do it. You need to know where you stand in the minds of your customers. Do your customers find anything distinctive about your products, services or relationships with them?

Create evangelists of your employees and customers. Word of mouth is the most powerful and cost effective way to promote your business. Enthusiastic employees share their opinions with family, friends, industry associates, and of course customers. Happy customers want to see you succeed and spread the word. I was fortunate to have a customer evangelist who closed hundreds of thousands of dollars in sales for me. When you treat people with integrity and appreciation they will help you in return. On the other hand, I recently ate at a restaurant where the food was excellent but the wait staff was sullen and impatient. I won’t recommend it or return. Are people saying nice things about your company?

Do quick concept tests of new product and service ideas with your customers. Customers like to give you feedback if you listen to them attentively. You can go to customers with sketch product concepts and get feedback that can be highly valuable. I presented a product sketch with preliminary specifications to the IT manager of a large corporation who said, “If you build that product at that price I’ll replace all of my old units with it.� He bought over $2 mil worth of the product. Another time I talked with a good customer about a new ad concept; he didn’t like it and made suggestions that led to a very successful lead generating campaign. Reward customers for their efforts to help you with special discounts, gift baskets, etc. I found that it improves participation when you make a charitable donation in their behalf ($5 to $10). Do you regularly ask customers for feedback, act on it, and reward them for it?

Identify the information seeking habits of your customers. To communicate efficiently with potential customers you need to know how they go about searching for information on your product category. Aside from personal referrals, customers may look to: the internet; Yellow Page listings; ratings services; directories; trade shows; conferences; trade publications; user groups; seminars; local papers — the list of possible information sources is vast. Ask your good customers how they first learned about you and what steps they took to find more information about your company. Was it easy or hard for them to find the information? Was any important information missing? Do you know the best media to reach potential customers?

Segment your customers into groups based on potential for repeat and referral business, and pamper the best segments with loyalty rewards. New business development is expensive. Sales and marketing costs for new customers can easily exceed 20% of revenue in the first year, making those accounts marginally profitable. Without new customers a business will atrophy; however, new customers must become loyal customers to make a business successful. Loyal customers not only cost less to service over time, with typical sales and marketing cost less than 10% of revenue, they also tend to be less price sensitive and refer other customers to you. And, loyal customers are most responsive to cross-selling and up-selling of your full line of products and services. Do you have methods to identify, profile, and pamper frequent users? Does your profile information enable you reach out to prospective frequent users?

Successful marketing strategies are based on: extensive dialogue with customers; excellent customer service; teams of passionate employees; and, carefully defined profiles of customers who provide profitable, long-term repeat business.

Here’s a simple marketing effectiveness check list to use the next time you are preparing to launch a new communications campaign. Ask yourself:

• Is your target audience of frequent users well defined?
• Does your audience use the media you have selected?
• Are you confident that your message will be well received?

If you answer yes to these questions, you’re doing cost effective marketing.

About the Author
Scott Barnett is President of Art & Science of Marketing (ASMI) http://www.better-faster.com. ASMI is a business consulting firm that helps high tech and industrial products companies to create and keep more customers.

           

Posted on Wednesday, September 13th, 2006 at 12:33 pm and is filed under Marketing, Small Business. You can follow any responses to this entry through the RSS 2.0 feed.