Even with a tight marketing budget a small business toolkit exists…a look at inventory of marketing tools and an executable example
In part one of this series entitled No Marketing, No Ad Budget, No Problem, How to maximize a minimal marketing budget with a small & medium-sized business toolkit we covered maximizing marketing and ad budgets. Not having a decent marketing and advertising budget, but there are plenty of effective tools at your disposal.
There are Three priorities for a small businesses:
- Generating transactions right away there is a need to generate and conserve cash immediately to keep the business afloat
- Expanding the number of potential clients who know about the business
- Creating a database that will allow the business to remarket and lower the costs of acquisition
And there are five likely transactions:
1. Direct sales:
Someone calls you on the phone or goes to your website and orders your product or service right away.
2. Requests for information:
Someone calls you on the phone or goes to your website and requests something (information, a white paper, a coupon, an offer) which you then follow up to make the sale
Someone comes to your store or place of business in person
Someone goes to your website to look at different products or services but not necessarily to buy something right away. Ideally, there should be a way to convert those visits to sales
5. Someone sees your product or service and immediately forwards it to someone who needs it right away
Of all transactions there is ONE potential transaction you want to avoid at all costs: someone keeps your information for the next time. Because, if you dont generate a lot of transactions, there is not going to be a next time.
My advice is to act in concert with your brand definition, but concentrate on capturing sales or you won’t be around long enough to be a brand.
Now the Toolbox A different vision.
We looked at the many tools that small and medium-sized business have from the point of view of:
- Does it generate transactions?
- Will it expand your reach?
- Can it help you build a database?
- Is it right for your product or service?
- How much does it cost?
Click to enlarge the charts below
Creating an ROI for each model.
There are three main steps to creating an ROI model that works for every medium:
- Determine what your advertising needs to accomplish
- Create a range of possible outcomes
- Cost them out
Lets consider the first tool, your Website, and web advertising.
1. Your website: cutting straight to the chase (Im not going to get into a discussion of web design), there are three things you need right away:
- A contact form for people to get in touch with you (with your phone, email and any other contact info you consider viable)
- An online store (if you sell products or services directly)
The ability to accept payments online. There are three main ways to do this:
- Traditional credit card processors
2. Web advertising
In some ways, Web advertising has become the TV advertising of modern times: the more targeted it gets, the more expensive it is; the cheaper you do it, the less targeted it is. There are always middle grounds, but the relationship between targeting and cost is a real one that can’t be ignored.
Basically, there are three ways to buy “regular” web advertising:
- Bulk ROS through an ad network :
This is the cheapest way to buy web and CPM’s range from a dollar to perhaps $8 or $9. With bulk ROS you basically give the ad network where you do NOT want to run (e.g., porn sites, or religious sites) and they place your banners just about everywhere. This works well for businesses that are either not very targeted or that are trying to find its natural clientele. In fact, Bulk ROS can be a great way to test ads to see response ratios, profiles, etc.
- Targeted Ad Networks:
At a higher level, you can buy targeted customers via ad networks. In this case, you can work with the ad network to select types of sites and deliver more targeted messages. For example, let’s say your business specializes in expensive vacations. You can work with an ad network to select sites that specialize in vacations, of course, but you could also choose magazine sites with an affinity (e.g., Smithsonian Magazine), sites with similar lifestyles, and much more. CPMs are all over the map, as are CPC’s (Cost per click) but you can expect CPM’s to begin at around $10 and go on to $50 or more.
- Directly from sites you think will fit the profile of your buyer:
So, for example, you could go directly to www.cutebutexpensiveboutiquehotels.com and buy advertising there. Again, CPM’s will be all over the place but, in general, you can expect to pay $15 and up. Many sites (e.g., YouTube) offer huge segmentation possibilities.
So, how do you decide?
Again, back to basics: follow the decision process.
Let’s take two examples:
Example 1 – Customers buy very expensive vacations online
Lets say you would like the cost of advertising to be no more than 1/3 of the total sales. You would then look at $15,000 and up in sales. Upon analysis, you can see some of the results are good (green) and some are bad (red). There are three ways to deal with this data, of course:
- Improve your response ratio à apply lessons of the best-performing creative and sites you run and continually test and improve.
- Sell more expensive vacations à so you would need to differentiate the elements that expensive vacations have in common (e.g., destinations, buyers, extras ) from the ones that inexpensive vacations have in common (including the source of the clicks, of course) to fine tune your offer.
- Pay less per click.
It is imperative, however, that you form a “model of the business” to help you judge.
Example 2 – Customers don’t buy online, but rather, request information and then you follow up to sell.
This adds a huge layer of complexity as you need to analyze:
- The offer that makes potential buyers click on a link to go to your site and download information
- The information itself
- Your own conversion factor
- Your own cost of the follow up
So the cycle is: person clicks and lands on your site (cost: $1.25), clicks and downloads the information package (has to leave behind his contact information), you or your sales person calls him up and close the sale (cost: $90 per follow up, 6 hours @ $15/hr). We would then have a model as follows:
In keeping the entire cost to about 1/3 of the sales, we would then see:
Cost of the advertising: $1,250 which is fixed
Cost of the follow up: $90, which is variable and depends on the follow ups
But now, we would be looking at four factors:
- How can I lower the cost/click
- How can I improve the percentage of those landing on my site who download information (so I have more people to follow up)
- How can I improve the percentage of people with whom I follow up who then buy a vacation package?
- Improvements to the sales materials
- Improvements to the sales process
In the following parts of the series, I’ll address what to do with the tools and how to analyze them.
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