Advertising Futility
A client called me from a medium-size Canadian town of about 120,000. The client is in charge of marketing for a jewelry store. One of about five competing stores within the geographic area of dominant influence of this town.
The boss had entered into an agreement to do some television advertising and they said they wanted to do an ad aimed at increasing their wedding ring business. The client’s question to me… should I do 30 or 60-second spots?
How would you answer that question? What other questions might you ask?
More background? The original proposal from the TV station was to spend $3,600.00 on 72, 30-second spots. We had already discussed the creative and I had recommended one-minute commercials because research indicates that longer spots generally out-pull shorter ones. There is a caveat, however. The spots need to be direct response in nature. In other words, an offer has to be made with a directive to respond.
Fact is, the client’s creative had a soft offer, which put the commercial in limbo. Not really direct response, but not pure image advertising either. So again, what would you do?
Let’s do something almost no advertiser ever does. Let’s forget the reach and frequency issue and get right to the hard-core numbers. Let’s ask if this is actually worth doing at all. Here’s what we can assume…
1. If there is a population of 120,000, there are no more than 40,000 households (assuming just three live bodies per household).
2. Since a wedding engagement typically involves two individuals from two separate households, we’re out to reach just 20,000 potential buyers.
3. Market research indicates that .008% of a given population gets married each year. You would take that number from the overall populaton, not households, so there are just 960 potential weddings per year in this market, or 80 per month.
Wow! A little different look at the numbers, isn’t it. Would you spend $3,600.00 to reach just 80 prospects? That comes out to $45.00 per potential buyer. Doesn’t sound quite as good as the $30.00 per thousand reach that the ad rep probably told our guy, is it?
Still, I’m not saying it would be a bad buy, but we’re not finished yet.
Of those 80 potential buyers, how many of them are likely to be watching TV right when my client’s ad runs? If the station has an audience share of 30 in the programming he buys for his spots – an incredibly high number, incidentally – 30% of those 80, or 24, can be expected to be watching. Now we’re up to $150.00 a prospect, just to reach them with the TV ads.
Now, how many of those 24 are ready to act? How many have loyalties to another store? How many have the budget or would qualify for financing, for our guy’s inventory? How many did the ad actually appeal to?
And we’re still not finished. What are the sales skills of our store’s sales staff? Once these few prospects straggle in, you still have to convert them from prospect to customer. If we assume that our questions in the last paragraph eliminate another 12 of our 24 prospects, we’ll get 12 respondents to the ad walking through the door. If the staff typically converts one out of three to a sale, they’ll close four sales, at an advertising cost per sale of $1,200.00 per sale, before sales commissions.
Margins are better in the jewelry business than in most retail operations, but you still have to recover the costs of marketing, inventory and overhead. So you really need an average sale of about $3,600.00, on each of these four sales to make the program pay for itself.
Of course, if the spots bring in more people and more sales are generated, the store can run this program either with more profits or with lower margins, and still justify the expenditure.
Three points from this exercise we’ve been through together…
First, some versions of the numbers – the odds – we’ve been discussing apply to your business as well, regardless of the media in which you advertise.
Second, are you considering these things as you make your marketing decisions? If you’re not, you’re nuts.
Third, the odds of advertising success are considerably less than getting a hit in a baseball game. On the surface, the odds look terrible. Yet advertising works. Advertising – yes, mass-market advertising – can and does work in building businesses. But you must realize your odds of profitably acquiring new customers, clients or patients using traditional advertising are slim indeed. Almost all businesses acquire new customers at a loss. It works, though, because as new customers come in, they also come back, without the benefit or requirement that they see ads first.
The lesson to be learned is that you must have systems in place to maximize the transaction from every new-client purchase, and do whatever it takes to get that new client to come back and buy again, as soon as possible and as often as possible. (In the case of the jeweler, he must not only sell the happy couple her wedding set, they’ve also got to sell the groom’s ring, and perhaps special items as gifts for the entire wedding party. That may be accomplished during the first visit. It may take several solicitations prior to the wedding and several afterward.)
Advertising is a messy, unpredictable, almost futile endeavor, which is, absolutely necessary. But you can increase your odds of success, by calculating your numbers in advance and making sure your ads do everything possible to get your audience to take specific action in response.
And, there are alternative methods of advertising, which can allow you to dramatically increase your chances for success, lower your costs, and postpone incurring those costs until after the new business is acquired. But that’s a topic for another post!
Obama Did What?
Oh, this is classic! I quote the May 21, 2009 headline from Adverting Age magazine… “Obama Halves Chrysler’s Planned Marketing Budget.”
The article goes on to say, in part,
“DETROIT (AdAge.com) — Chrysler wanted to spend $134 million in advertising over the nine weeks it’s expected to be in bankruptcy — the U.S. Treasury’s auto-industry task force gave it half that.
“So if GM, which is wrestling with the possibility of a Chapter 11 filing itself, is wondering how much influence the task force will have over marketing, the answer is: plenty.”
So here we are in near depression. We’ve got the government virtually nationalizing private businesses all over the place. Everybody seems to be looking to the administration to get us out of this mess. We believe our leaders are supposed to be wise. We look to them for an example; to show us the way to go; to give us the path back to prosperity.
And what do they do? Tell us to stop selling.
Are these people crazy? Don’t answer that. None of us really wants to know.
Recession Marketing Tips: The Power of Lifetime Profit
I’m about to help you find thousands more dollars in your marketing budget—resources you probably never knew you had. That’s because chances are you’re currently spending a lot less on marketing than you can afford to.
Yep, you read that right.
Chances are you’re currently spending a lot LESS on marketing than you can afford to!
I’m talking about the Lifetime Profit Value of a customer. And when you know what it is, you’ll begin to appreciate what a good customer is worth to you, and how much you can afford to cultivate one.
So what is it? Simply put, it’s the actual dollar amount your average customer generates over their lifetime.
This is a concept that very few business owners fully appreciate. Armed with this information, you’re ready to take on the world and give yourself this vital leg up on your clueless competition.
In order to calculate this crucial figure, you’ll need the following information handy…
1. The average dollar amount collected per purchase
2. Your average profit percentage
3. The average customer’s frequency of purchases
4. The average “life span” or amount of time you keep a customer
Now let’s take a look at an example to see how the formula works…
Suppose you have a massage therapy practice. Let’s look at the numbers…
Average transaction, $47
x profit after marketing, 50%
collections, overhead, etc.
= Average profit per visit, $23.50
Average profit per visit, $23.50
x frequency of visits, 4x/year
x average lifespan, 8 years
= LPV $752
What does all this mean? It means that you can spend up to $752 to attract a single customer–and still break even! Now, who wouldn’t spend $94—or even $150 or $250—to make $752? That represents an ROI of upwards of 300%…400%…even 700%!
So why is this important to you?
This tells you that you can do a whole lot more than you think you can to attract high-paying customers to you. What’s more…you can do a whole lot more than your competition thinks they can do to attract high-paying customers to them!
That means you can make better offers…be more generous with current customers…give more back to the community…get your name out there in lights…
And still make a heck of a lot more money than that scarcity-minded business owner down the street, who is clinging to each and every dollar like it’s his last.
You’ll find you’ve got tons more resources to work with than you ever realized.
So get out there today and start making offers, marketing your business, and generating new customers!
For more information on an exclusive, step-by-step system that shows you how you can recession-proof your business in 90 days or less–using proven low-and-no-cost strategies–CLICK HERE NOW.
Recession Conference Call Recording
Below is the recording from our recent conference call, “How to Recession-Proof Your Business in 90-Days or Less.” Enjoy!
(If you want to download the file directly, here it is.)
What Business Are You In, Anyway?
Let’s start with a question. What business are you in?
No, really. This is a vitally serious question.
Ask 100 business owners what business they’re in and 97 of them will tell you what they do. That isn’t the question.
Ask 100 jewelery store owners what business they’re in and they’ll tell you, “I’m a jeweler,” or, “I’m in the jewelry business.”
Ask 100 plumbers and they’ll tell you, “I’m a plumber.
Real estate agents, mechanics, insurance salesmen, manufacturers, printers… it’s all the same.
If you own the business, you may think you’re a jeweler, a plumber, a real estate agent, or whatever, but you’re not.
No, the day you took ownership of the business is the day you became something different. That’s the day you became a marketer of jewelry or plumbing services, or property or whatever, and you were no longer a what you thought then, and probably still now think you are.
The late, great business leader Peter Drucker said in effect, “The only two legitimate functions of business are marketing and innovation. The rest are expense.”
When you own the business, your primary function is to “bring in the business.”
Other people can be found to do virtually everything else; buying and managing inventory, managing employee schedules, training, accounting, you name it. But if you fail in the function of bringing in the business, you have no business.
Dare you abdicate this responsibility?
Unfortunately, most business owners never realize these important truths and that accounts for their lack of prosperity.
For example, one jeweler has been in business for three generations and yet is generating less than a million dollars a year in gross revenues. Another opened just three years ago and is already enjoying a multi-million dollar business.
How can this be?
Some would chalk it up to luck, location, up-front capital, etc. But the truth is, the difference is probably marketing. The owner who focuses on marketing will be the one who makes the most money, even if his skills, inventory, and location are inferior. This is the businessman who realizes his primary function is to bring in the business.
There are only three ways to grow your enterprise…
- Get more customers
- Increase your average sale
- Get your existing customers to come back and buy more often.
A couple years ago, jeweler, Bill Warren, realized his role was to market. He adopted these three goals. By steadily working on the marketing of his business, he was able to go from a typical May of $40,000.00 to a May of over $61,000.00. That’s more than a 50% increase, in just one month.
What did Bill do? He installed a formal up-selling/add-on selling system in his business that increased his average ticket dramatically, and served his clients at a higher level.
He also took advantage of a unique PR opportunity resulting from his gemologist and certified appraiser training, which had the phone ringing off the hook. As a result, 88 new customers came his way in May. And Bill is operating out of a small town.
Kent Whipple owns Whipple Services in Salt Lake City. He has built a multi-million dollar plumbing, heating and air conditioning business in near-record time. But he can’t tell you the last time he turned a wrench, drove a truck, made up an employee work schedule or did the payroll.
Kent has delegated all of those responsibilities. He has people who can do that. He focuses on two things… 1) providing the vision for his company and 2) marketing.
There are a lot of plumbers and heating guys in the Salt Lake City market who have been around a lot longer than Kent, who aren’t doing a quarter of the business he is. But Kent understands that he’s not a plumber, he is a marketer of plumbing, heating and air conditioning services.
And because of that understanding, not only has Kent built a thriving enterprise, but he has the time to enjoy himself, taking several extended trips every year, confidently knowing the business will continue to churn along in his absence.
But if he saw himself as a plumber, he would never have been able to build such a business or enjoy such a lifestyle. He’d be too busy with the wrench.
Odds are you have spent considerable time and money to become the professional that you are. You have time in the field; you may have paid for substantial training; you unquestionably have countless hours invested in learning your craft. You may have taken business courses, even gotten a degree.
What have you done to become the marketer that you need to be? Have you invested the same kind of time developing and honing the skills you need to run the “engine” that truly drives your business?
I suggest you start with a simple commitment of 30 minutes a day. Set aside at least a half hour a day to work on the marketing systems of your business. (Remember, that is to work on developing and implementing marketing systems, not operating them.)
If you don’t have an up-sell/add-on selling system in place, that would be your most lucrative place to start. Determine what the pieces of the puzzle are for such a system, then decide how many 30-minute sessions it will take to develop all of those pieces. If it will take 10 sessions, you will have your new system ready to put in place in 10 working days.
After you’ve done your first project, select another – perhaps a formal referral system – and begin working on that the same way. Put in your 30 minutes and stop at the end.
The key is to remain true to the commitment. Set an appointment with yourself and honor it. Unless the building is literally burning down, do not let anything – even clients – interfere with this effort.
Finally, if you’re not skilled as a marketer, it might be a good idea to get some help. This does not mean simply abdicating your marketing responsibilities. It may include some delegation. It certainly includes getting some training, and gathering some resources. Consultants, ad agencies, trainers, books and audio programs… these are all resources. But remember that resources are there to help you accomplish your responsibilities to bring in the business, not take over that job for you. Ultimately the responsibility can only rest with you, the owner.
This is some of the most powerful and useful advice on marketing I have ever given to you. Fail to heed it at your own peril. Follow it and you will quickly, easily, add tens of thousands – maybe even hundreds of thousands of dollars in revenue to your enterprise.
Small Business Marketing Tips: Why Solving People’s Problems Will Make You Richer Than You Ever Thought Possible
All businesses exist to solve problems.
If you’re a dry cleaner, it’s removing dirt from fragile clothes without damaging them. If you’re a taxi driver, it’s helping people get from point A to point B quickly. If you’re a marketer, it’s creating additional revenue for your customers and clients by helping them attract more business.
But there’s more to being a problem solver than simply providing a product or service that resolves a challenge.
It’s about developing a proactive, service-oriented mindset that places your customers’ needs at the forefront of everything you do in sales and service.
After all, the singlemost important element of ANY business venture or marketing campaign ISN’T a product.
It’s a hungry market.
So listen to your customers and find out what they’ve got a hankerin’ for.
Recession Marketing Tips: How Your Mindset Creates Success, Even in a Down Economy
Have you watched the news lately? Listened to the radio? Opened a newspaper?
If so, then you’ve been inundated by doom and gloom everywhere you turn.
Or maybe you’ve noticed your store is a little emptier…your inbox a little less crammed…your phone a little quieter.
You hear about businesses, households, and individuals failing all around you, and you wonder:
Am I Next?
Well, the answer to that question, my friend, is ENTIRELY up to you.
Here are 4 powerful ways to shift your thinking so you can find success NO MATTER WHAT the economy is doing.
Recession Marketing Tips: Where Is the Real Leverage in Your Advertising–the Media or the Message?
If you’re like the vast majority of business people, you think more is better when it comes to advertising.
Which sets up a real dilemma for you, because you hate it. You hate spending money on advertising. Yeah, you feel like you have to spend it, but you don’t like it. And when times get tough, that’s the first place to cut.
Then again, deep in the recesses of your mind, you feel like, “Gee, if I only had more money to spend on advertising, I could really get my business going.”
You may even believe that the reason your advertising isn’t working as well as you’d like is lack of budget; that if you could just spend more, your marketing problems would be solved. So you resent your limited budget even more.
But if there is one thing that bugs you even more than spending money on the media to advertise, it’s spending money on the message.
You want to get your ads out there, and while you don’t like it, you’re willing to pay the bill for the newspaper, radio, TV, magazines, billboards, trade journals, yellow pages, websites, pay-per-clicks, direct mail, and any or every other form of advertising that you can justify in your own mind that makes sense.
“But boy, don’t make me spend money on the message!”
More than anything, you hate to pay for ad agencies or copywriters or graphic designers. The cost of photography, audio and video production or any other message “massagery” really chaps your hide.
After all, if you spend it on the message, there is less to spend on the media. And you need to spend more on media, because more is better in advertising.
Well, let’s take a look at that for a minute. Is there any chance that you might be wrong?
Recession Marketing Strategies: Are You Wasting Your Most Valuable Business Asset?
Here is a profound truth, something that not one in 20 business owners truly appreciates:
When you fail to continue to SELL to your customers, they will fail to continue to BE your customers.
And when the economy goes in the tank, if you’re not selling to them enough, you’ll be the one who is flushed.
I don’t want to assume anything here, so let’s start with THE fundamental principle of being able to act on the ideas you’re about to receive.
One of the biggest marketing mistakes businesses commit is the failure to capture the names and addresses of everyone that comes into their business–regardless of whether they make a purchase or not. It boggles my mind at how many businesses fail to do this. They will spend thousands of dollars on advertising to bring in new people, and then they don’t bother to capture their name or address.
You’ve got to understand–these names are pure gold! You’ve paid for them, and you’ve paid a lot. So capture them!
Even if they didn’t buy anything from you today, the fact that they came into your business or practice, or responded to an ad, or visited your website, means they are at least interested in your product or service. They’ve qualified themselves as a prospect. You don’t want to let them escape and put yourself in the regrettable position of having to spend a bundle to bring them back, when a letter with a simple postage stamp–or even a FREE email–can get the job done far more efficiently.
So the absolute crucial, never-fail, gotta-do number 1 strategy for increasing frequency of purchase is…
CAPTURE THE NAME, ADDRESS, PHONE NUMBER, AND EMAIL ADDRESS OF EVERY SINGLE CUSTOMER, CLIENT, PATIENT, OR PROSPECT THAT GRACES YOUR ENTERPRISE IN ANY WAY!
(Want step-by-step instructions to install a revenue-stomping back-end selling system in just 5 days? It’s just one of the 12 vital strategies we cover in our 90-Day Recession Survival Blueprint! Get all the details about it here!)
And once again, the BEST way to get your customers to come back more often is to…
ASK THEM TO!
The big catalog companies like Lands End mail catalogs to their best customers as many as 15 times a year.
That means you’re getting more than a catalog a month. And the catalogs aren’t that different. Different cover; a change in the 2-3 spread, the back inside cover and probably the center spread and order form page–and that’s it! The rest is the same.
Why do they mail so often?
Because it works!
You should be contacting your list at least six times a year–and 12 would be better. Not all of those contacts have to be solicitations. Birthday and Christmas greetings, as well as thank you cards, are always appropriate. But the majority of those contacts should be inviting customers to buy again.
You see, once they have purchased from you, the opportunity to sell them something else goes up dramatically because you’ve broken through the barrier of sales resistance.
Your customers trust you. They are receptive to your offers to add more value, more advantage, more protection, more benefit to their lives.
They are prime prospects for additional products and services.
If you are not selling to them, you are quite literally leaving thousands–even millions–of dollars on the table.
So get out there and make those back-end offers–TODAY!
Want step-by-step instructions to install a revenue-stomping back-end selling system in just 5 days? It’s just one of the 12 vital strategies we cover in our 90-Day Recession Survival Blueprint! Get all the details about it here!
Recession Marketing Case Studies: Howard Brinton and The Fastest Way to “Free” Money
When the economy goes south–nationally, or simply within your own business–you’re going to need all the money you can get, as fast as you can get it, and with as little expense in its acquisition as possible.
Upselling is the place to begin.
Building transaction size is the fastest, easiest, most cost-effective way to increase revenues and profits. And it can literally be done in five minutes.
Here’s a remarkable case study that proves exactly that…
