Old School View of Limited Budget Marketing Essentials

There are three priorities for a small/medium sized business

Even with a limited budget you have a number of marketing options at your disposal, but what are they?

There are a number of marketing opportunities to generate sales and visibility at your disposal.  Not having a decent marketing and advertising budget, but there are plenty of effective tools at your disposal.

This is a multiple part series examines a wide array of marketing and advertising tools available to small and medium-sized businesses. Part one No Marketing, No Ad Budget, No Problem, we focused on how to begin analyzing the tools for effectiveness and ROI. In part two What’s in Your Marketing Toolkit  looked at the arsenal of tools and this piece examines advertising and sales option to generate visibility and drive conversions.

There are three priorities for a small/medium sized business:

1. Generating transactions right away there is a need to generate and conserve cash immediately to keep the business afloat.
2. Expanding the number of potential clients who know about the business.
3. Creating a database that will allow the business to remarket and lower the costs of acquisition.

Consider direct marketing.

Direct Marketing covers a huge range of actions:

• Good old direct mail (snail mail) which can itself include anything from catalogs, to brochures, letters, postcards and samples.
• Shared mailings (e.g., Valpak, Amazon, bingo cards in trade magazines)
• Email
• SMS
• Zone or zip-code drops on newspapers and magazines

In general, there are three characteristics to direct marketing:

1. You push your advertising
2. It is targeted
3. Its only purpose is to generate a transaction. And a transaction can range from just someone making a call to a person buying directly from you (either by phone, order form or online

The nuts and bolts are very similar, no matter the platform: you create an offer, buy or rent a list, drop the piece, wait for a response, analyze and tabulate and do it again.

From the point of view of a small or medium-sized business, there are huge advantages to direct marketing: You can customize your message to fit the target consumer exactly, meaning, you should expect a higher rate of response. You can run many campaigns at once. For example, let’s say your company specializes in kitchen redesigns, you can conceivably run campaigns at several levels:

• A regular ad in a shared magazine or newspaper to be dropped in specific areas
• Postcards (typically 5×7) or tri-fold brochures to very specific zip codes (e.g., 33146) where you might see a lot of construction activity
• Hire a company to leave door hangers (e.g., a poly envelope containing a brochure, a letter and a coupon) in specific homes where you see construction going on.
• You set your budget. If you want to spend $2,000… you can do achieve results; if you spend $12,000 you can also achieve results, just on a different scale. But budgeting for direct marketing is relatively straightforward
• Paper is harder to ignore. Emails can be deleted in 1/10^thof a second. A letter, postcard or brochure might hold your prospect’s interest longer and elicit a response, which is why one still sees a huge investment in direct marketing.

There are also some huge issues with direct marketing:

• The cost, especially for printed pieces, goes from high to outrageously high.
• While reputable list houses will guarantee deliverability (e.g., no more than 1% return), results are on the low side. A 1% or 2% response is considered normal for direct mail campaigns. There are many programs that allow you to “mine” electronic databases (for example, YP.com). Apart from being borderline illegal, these DIY databases might have return rates that go from 15% to 30%, which is huge.
• It is slow. When talking about printed pieces, you must design the piece, get the camera-ready art, print it then get it shipped back and take it to the post office, or have the printer do it (which adds to the cost).

Analysis and Direct Marketing.

When doing direct marketing it is imperative that you track results, meaning that even from the get-go you should develop several messages (and even looks). Again, considering a small to medium sized business (and not the behemoths like DIRECTV, Comcast, etc) this can certainly put a strain on your marketing operation as you will need to either develop or at least be involved with the development of several pieces, implement the mechanisms to track results and spend time analyzing it.

Let’s take the mythical kitchen remodeling company and see the many different actions we might take.

1. A coupon magazine.

Initially, you might consider a coupon magazine .This magazine has a circulation of a few thousand and a rate of about $5000 per half page. It is distributed monthly to homes in the “$300,000 to $5,000,000”range. The analysis in this case is very simple: with an average cost of around $30,000 for a kitchen remodeling (though it can go way higher) you only need to get one job from this magazine to pay for it forever. However, with a circulation of only a few thousand, you need a very high response for you to close even one deal.

In the final analysis, there can be two objectives to advertising in this magazine:

1. Direct calls which might lead to sales, of course
2. Direct actions from consumers (e.g., calls, emails, visits to websites) that will allow us to create a mailing list that we can then use to send more complete information via email or regular mail
3. This is one example of an ad (a real ad in the magazine)

This ad has several good points:

• Good photography that illustrates the kind of kitchens they build
• Mentions the cost directly these pre-selects customers
• Phone and website for response

But this ad also has several key drawbacks:

• No email this will cut down the number of responses and adds a ton of extra cost because while an email takes about a minute for the company to read, put the information in a database and in a list, a phone call takes several minutes to process.
• The offer is vague and lacks credibility: bring this ad to receive a discount on any kitchen. Really? Of how much? 10%, 20%, 80%? And how do I know that you won’t just increase the price to then reduce it by the discounted amount? After all, kitchens must be custom-made and you won’t know the cost until Kitchen Prospect can come in, measure, talk to you, etc. In general, the more specific an offer the more credible it is. Consumers, and especially high-end consumers, are jaded, intelligent and distrustful.

2. Postcards

Another parallel route could be to mail postcards to all homes within a designated area. For example, 33146. Postcards typically cost anywhere from $0.50 to $2.50 depending on where you print them and your timetable. If you can schedule it for a 2-week delivery, you can get beautiful quality postcards for $1.00. However, to that you need to add postage ($0.39) and naturally your time or your agency’s time in creating it. If you follow the DIY route, fixing 1,000 labels on postcards is not fun. If you get the printer to do it, it is an extra cost (well worth it, by the way).

So, for you to make a profit (at least on the hard costs) you have to get a response of at least 0.2% AND close at least 3% of those who respond. While the numbers might look daunting, the huge popularity of postcards underscores their ability to get results quickly. Next time we’ll talk about remarketing and boosting your performance.

Related content:

Part one: No Marketing, No Budget, No Problem

Part two:  What’s in Your Marketing Toolkit?

3 Marketing Tips to Increase Sales Success

4 Steps to Pump Up Your Marketing Muscle