So many small business owners treat their sales and marketing effort as a sort of ‘black art’. It’s the attitude that, hey, things are going well this week, I’ve got a little money in the checking account, so…why don’t I throw a couple thousand dollars on a few advertisements.
Several weeks ago, I had the opportunithy to provide some consulting work for a company that does exterior remodeling, putting new exterior siding on homes, roof repair, things like that. Here’s what I told them (and I’m pretty sure that there are some lessons here for you and your business as well).
The key to any effective sales/marketing campaign for 2009 is researching the concept of determining your ‘customer value’. Many small business owners throw a bit of money on marketing, which is a common but fruitless exercise. There’s no specific strategy, no specific targets, just throw some money at the wall and see what happens, and so on. Any apparent success is either accidental or just plain lucky.
So what would happen if you closely examined your past clients from 2008 and compiled the following information?
- zip code & street address
- apparent household income
- home value
- apparent age bracket i.e. 40-50; 50-60, etc.
- average sales revenue per average job
- did they just move in??
- how long have they lived at that address?
- net profit on each job after labor and materials (this is the same as your customer value) – let’s assume that it’s $1000
So if you determined from your research of prior clients that you would average $1000 pure profit on each of those jobs, the question becomes, how much of that $1000 would you spend for similar additional opportunities? $200? $400 $600??? Let’s say it’s $400. You spend $400 and get $600 profit back.
Next you’d set a realistic target for 2009. Let’s say you want to book 50 new remodel orders that you otherwise wouldn’t have gotten. This would equal an additional $30K revenue for you guys, after you would deduct a $20K marketing budget.
So, its safe then to say that if I pumped $20K into a marketing project over the next 3 months, that I’ll land 50 new clients? Not necessarily, because you and I both are aware of the sales pipeline effect. You start pumping resources into a sales program and it takes at least some time for anything to dribble out the other end. On the other hand, if you quit sales and marketing, your phone is ringing 3-4 months later from someone who got your brochure, and had saved it for just this moment. So, treat your investment into any marketing campaign startup as just that, an investment. If your overall strategy is 50 new clients with a marketing budget of $400 per client or $20K, start by trickling a smaller steadier flow of funds into the effort. As you begin observing a return on your investment, then have plans in place to increase the size of your marketing budget up to your targeted level. But don’t just start by throwing the full amount at the wall to see what happens.
Another thing to be aware of is how to communicate with potential clients. There’s regular television channels, cable tv, radio, and newspaper. Regular TV ads are very effective for mass market products that everybody uses, like toothpaste for example, or Ford F-150 trucks. Darn near everybody brushes their teeth once in awhile, and many people own a vehicle of some sort. But not everybody is a homeowner, and even fewer are homeowners with an income level to support the cost of a remodeling project. So you need to be much more targeted in your communications.
There’s a huge reason why radio and newspaper companies are going bankrupt. Take me for example. I haven’t subscribed to a newspaper since we moved to Detroit. Why should I – I can turn on the 10pm television news and know everything I want to know about the scum in Detroit city and the horrible economy.
I honestly can’t tell you the last time that I’ve listened to the radio. It’s been months if not years. When I can teach Pandora.com to play only the music I like, or play my favorite cd’s in my truck, why listen to some twit babbling away on the radio, the stupid commercials, lousy reception, etc.
So here’s what I’d do if I were in your shoes….and take this as a FREE suggestion, so feel free to treat it for what its worth…
1. Determine the customer value – this will determine perhaps the scope any marketing effort you guys would want to do in 2009. It gives you a way to justify any money you do budget for marketing, because now you have some logical decision points and parameters established.
2. Then collect as much detailed info about your past clients as you can. Once you identify the key characteristics of your prime customers, you can buy targeted lists of these people to communicate with.
3. Develop a multi-faceted targeted campaign strategy to achieve whatever objective you guys establish for 2009. For example…
- 50 new remodel customers in 2009 at an average profit of $XXXX.XX, we’re going to communicate with them via…these methods.
4. Develop 3 different test groups of customers, i.e. different demographics, different marketing messages, etc. Test, and find out what works best. For example if you targeted a list of new movers into GR within certain income brackets/neighborhoods versus the general population, do the new movers have a higher tendency to contact you?
5. Develop a communications campaign that reaches these people in more than one way. I’d suggest highly targeted cable tv advertising, and direct mail postcards to the same neighborhood – i.e. I mentioned earlier that some cable networks, for example, can specify down to specific street addresses who will see what ad. Chevy trucks for example will show one ad in one neighborhood, and another ad in a different neighborhood to find out what works better. Direct mail postcards aren’t expensive, and cable tv advertising is far more inexpensive than traditional television.
If you need any assistance or have any questions about marketing your small business, feel free to contact me directly at sales@MentoringSuccessGroup.com.
