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Marketing Explained!

Marketing is the action of attracting customers.

It’s how customers perceive your business and website.

In this article, we will explore in detail the things that work and don’t work in marketing. We will show you common mistakes people make in marketing, and the steps to fix them. You will discover how much money you should spend on advertising, and what to do if you run out of money.

Who Should Do Your Marketing?

Marketing is one of the biggest sources of frustration and disappointment for many business owners. An advertising sales rep knocks on their door, and they put money (perhaps a lot of money) with the rep. To the business owner’s great disappointment, the marketing efforts barely produced any results. What’s even worse – the company is now low on funds.

Wouldn’t it be nice if you’ll never have to deal with marketing again? Wouldn’t you feel so much more relaxed and less stressed if a constant stream of customers were always rushing to your door? The thought of becoming an absentee owner sounds so good to so many people. People think to themselves, “If I can just become an absentee owner, I’ll never have to deal with marketing again.” What a relief of stress!

Then, there are these marketing and web site advertising agencies that seem so appealing. These people are professionals in marketing! They dedicate their careers to online and traditional marketing, and their reputation depends on the success of their marketing efforts. Wouldn’t it be nice if you could just hand over all your marketing to them, so you’ll never have to worry about marketing again?

Let me dispel two myths right now that could save you a great deal of money.

The first myth is the idea that you’ll never have to worry about marketing again. You need to spend your time reviewing advertising materials, analyzing the effectiveness of past campaigns, advertising, and making sure that the business and website is perceived the right way by customers.

The second myth is that an advertising agency or web marketing company will be able to solve all your marketing headaches for you. So what’s wrong with hiring an advertising or design agency to handle all your marketing needs? Several things. First, these people called “Account Executives” are just a fancy name for “Sales Rep”. If you ever talk to one of them, one of the first questions they’ll ask you is, “Mr. Owner, how much money do you have in your marketing budget?” Since these sales reps are often paid on a commission, they’ll then “prescribe” the advertising for you based on how much money you have. Are these the best advertisements for you? Not necessarily. They are just the ones you could afford to pay.

If you don’t learn marketing yourself, you will forever be at the mercy of sales reps, consultants, and advertising agencies that want to take your money. All kinds of people want to take advantage of you because they know that marketing is one of the biggest pains for small business owners. You will see some marketing seminar or audio program that promises to give you free web design templates or marketing tips. It’s so easy…All you do is fill-in-the-blank, follow the formula, and send them out! To be frank with you, we’ve tried those, and we either got terrible response rates, or a bunch of angry customers who got offended by the marketing materials.

The point we are making here is that you will never know whose advice to listen to if you don’t learn marketing yourself. If you don’t understand marketing, and three marketing gurus show you three different ways to market your business, I bet you’ll have trouble choosing which one to go with.

You are the person who should handle the marketing for your business. If your company’s marketing doesn’t work, customers won’t come in. If customers don’t come in, you’ll be out of business in no time. Therefore, it follows that giving away the responsibility of marketing is like giving away the life of your business. You will forever be depending on someone else to make your business work. If that person you’ve put so much trust and faith into (whether it’s an agency, consultant, or employee) – if that person doesn’t bring in the amount of business you had hoped, you’ll be back to where you are with the exception of having less money in your bank account.

I am not saying marketing is easy. If you’ve never been taught in marketing, it can seem like the most daunting subject. It’s so personal and so close to you, because your livelihood, in many ways, depends on the success of your marketing. Most people we meet have a lot of pains related to marketing. For some reason, this just seems to be the one area they cannot figure out. For example, Search Engine Optimisation (SEO) seems so mysterious and magical. It had made so much sense before when some sales rep or consultant explained it to you. You tried their methods, and it was nowhere close to your expectations.

Marketing Defined

There is a big difference between marketing and advertising.

Marketing is how customers perceive your business.

This perception is influenced by the advertising materials you send out, but it’s much more than that. How customers perceive you is also influenced by how courteous your customer support staff are, how well your website is designed (Does it look outdated? Does it look clean or cluttered?), how quickly you respond to customers’ concerns, the quality of the work you do for your customers… Everything that affects the customers’ perception of you is marketing.

As you can see, advertising is only one component of marketing. Successful online advertising brings customers to your website, but whether customers stay with you is another matter. You can make big claims in your advertising and bring lots of customers to your landing page, but if you cannot service them well, your marketing is not successful.

In order for your marketing to be successful, your customers must perceive your website as a place worth coming back to. So what is a place worth coming back to?

What kind of perception should you strive for? There are several possibilities:
1.Cheapest prices around
2.Widest selection
3.Best value
4.Highest quality work
5. Experts in this type of work
6.Most comprehensive guarantee
7.Best customer service

The list can go on and on. All of the above perceptions have worked for different companies. For your marketing to be successful, your customers need to perceive your business as the place that offers the best customer service.

What is Successful Marketing?

What does successful marketing look like? How do you know when you’ve done a good job at marketing your web presence and business? The answer is very simple. If your marketing is successful, your revenues should be growing steadily.

Notice that I used the word revenues instead of profits. There is a big difference between revenues and profits. Having more customers, more repeat sales, and having customers spend more money each time they come are activities that increase your revenues. Basically, you bring more money in the door. If you manage this money well, you will take more money home. If you don’t manage this money well, you might have brought in a lot more customers, but still take home the same amount of money as before.

Marketing is the activity of bringing more money in the door. Finance is the activity of managing that money so you will take home more money. If you did a great job at marketing, your revenues will increase. If you did a great job at finance, your profits will increase. In other words, successful marketing does not necessarily lead to your taking home more money. In order for you to take home more money, you must combine good marketing with good finance.

Another thing to point out is that if your marketing is successful, your revenues should be growing steadily. Notice I didn’t say the faster your business grows, the better. This is a very important point to make. A lot of entrepreneurs went out of business because their companies grew too fast.

At first, this might seem like a contradiction. How can someone go out of business by bringing in too much money in the door? The answer to this contradiction is not so obvious at the beginning. But once I point it out to you, you’ll begin to understand why steady growth is better than growing too fast. When your company grows too fast, you bring in a lot more money in the door. You have a ton of customers, and you have to service every one of them. First of all, you’ll be busier than ever. In the past, you are able to take the time to really make sure you do a good job for each customer. Now, you are rushing everybody just to get all the jobs done.

Your customers' satisfaction level might go down. They might have to wait a lot longer to get serviced because there are 5 other customers ahead of them. So the first problem with growing too fast is that you can’t service each customer as well as you can before. The second problem with growing too fast is that you might have to develop and new web modules, hire new web designers, programmers and customer support staff just to service this surge of customers. All these additions are expensive!

More people go out of business by growing too fast than not growing fast enough. That’s why we say that the sign of a good marketing program is to see your business grow steadily, not explosively. This brings up the question: what is good, steady growth? What is a healthy growth rate? A healthy growth rate is to grow your revenues by 10-20% per year. Growing by 20% a year is almost pushing it, so we would say 15% a year is probably a very good growth rate. If your revenues grow by 10-20% per year, you would have done an excellent job on marketing.

Common Mistakes in Marketing

Now that we’ve discussed the end results of good marketing, let’s talk about some of the common mistakes people make in marketing.

1. Confusing advertising with marketing. Advertising and marketing are very different things. There are many ways to market your business, and advertising is only one way to do it. In fact, advertising is often the most expensive way to market your business. If you think advertising is the same thing as marketing, you have just limited yourself to only using the most expensive way to market your business. There are lots of ways to market your business that are cheaper than advertising, and often times more effective.

Try this method. Talk to 3 of your customers and ask them about their overall experience. What is the most dissatisfying thing about your service? Their answers will tell you exactly what you need to do to improve.

2. Throwing money at advertising without understanding the big picture of marketing. Most people think that if they spend X rands on their website and online marketing campaign, they will get Y amount of business. If you want to get more business, you just need to spend more money in advertising, right? This is absolutely wrong. Spending more money on advertising does not necessarily mean more business! More often than not, it just means you’ve spent more money, and you now have less money in the bank account. Spending more on advertising may or may not be the key to bringing in more business. As you’ll learn, effective advertising requires you to deliver the right message to the right people at the right time in the right way. Simply having more website ads, or a bigger Pay Per Click budget is often not the way to bring in more business. How effective are your PPC ads? Are you advertising in the right place? Who is seeing your ads? Are these people the best customers for you?

3. Thinking that effective marketing must be expensive. If all you do is listen to the sales pitch of some search marketing rep and sign up with them, you might be misled to believe that effective marketing means spending a lot of money. These sales reps want to make you think this way, because the more money you spend with them, the more commission they make. If you become emotional and start thinking how this one advertising will bring in all the business in the world for you, you become an easy prey for these sales reps to take your money. The truth is – effective web marketing does not have to be expensive. If your marketing is done right and done methodically (rather than emotionally), it’s not as expensive as you might think.

I cannot emphasize enough that marketing is a lot more than advertising or selling. It’s about providing an excellent customer experience, which involves putting systems in place so that customers get a consistent, high quality experience no matter which employee is working that day.

Remember McDonald’s? No matter who is working there that day, you will always get the same experience. They always put X amount of salt into the fries, you always get your food within X number of minutes, and the employees always greet you the same way.

That’s how you want your business to be. The key to marketing is offering an excellent customer experience. You can’t just offer excellent service one day and crappy service another day. No matter how busy you are, no matter who is working that day – every customer must get the same customer experience every single time. How do you do that? You must implement systems and procedures, and make every employee follow them.

You see, since marketing is how customers perceive you, there are lots of ways to improve how you are perceived. Buying a bigger ad might increase your visibility when people open up the Yellow Pages, but do you see how there are a lot cheaper and more effective ways to improve how you are perceived? It might be as simple as training your employees on how to answer the phone. This is what you say when you pick up the phone, this is what you say when a customer asks for this, this is what you say when a customer shouts at you…so on and so forth.

You begin to set rules that your employees must follow. For example, answering each online visitor questions in a courteous and efficient manner. The exact rules and procedures will depend on your business, but you must have some kind of rules that everybody follows. And guess how much it costs to write down a couple of rules and make every employee follow them? It costs nothing. And guess how much better you’ll be perceived in the eyes of your customers? A lot.

I am not saying advertising is not important. Advertising is one important way to attract new customers. In fact, we will be dedicating a large portion of this article to the subject of advertising. But you should always remember that marketing is how you’re perceived by your customers, and advertising is only one way (and often the most expensive way) to improve that perception.

What Must Go Right for Advertising to Work

Since advertising is one important way to bring customers into the website or store front, we will now discuss this subject in detail. Before we delve into the details of advertising, let’s talk about what must go right in order for advertising to work.

Very simply, you must meet your promises. How many times have you seen the web site or advertising of some company, thought that they must be a big and reputable company, used their service – only to discover that the service they provided was way below your expectations? Did you become a repeat customer? Did you tell anyone not to go there?

You see, successful advertising brings customers in the door, but you must keep your promises. If your ads portray a much better image of your business than it actually is, customers won’t stay. They might begin telling their friends not to come to you, so your advertising has just backfired.

On the other hand, there is a philosophy of “under-promise, and overdeliver”. Is this a good idea? In our opinion, over-delivering is a good idea, but under-promising is not. You see, the business environment is getting a lot more competitive today. Customers won’t come to you if you underpromise. If you can provide a service better than your competitors can, what’s the point of being humble and under-promising? Tell customers proudly that you can do this, and amaze them when they come!

Think about your advertisements right now. What are some places you’ve promised too much? What are some places you haven’t promised enough?

Do you have systems in place to ensure that your promises are met every time – no matter how busy you are or who is working that day?

How Much Should You Spend on Advertising?

This is one of the most common questions people ask. How much money should you spend on advertising? Some consultants will throw you a number like 8-10% of revenues. Some people would say that you need to spend whatever your competitors spend. Others will tell you that you should only spend what you can afford. There is also another school of thought that says you should determine your goal, and set the budget according to the goal.

No wonder why people get confused. Yes, there are lots of ways to determine your advertising budget, and each method works better than others in different types of industries, and different sizes of companies.

We recommend 1-5% of  your revenue (not profit). Why do we tell you to only spend 1-5% of revenues on advertising? Because there are other ways to market your business, and advertising is only one way to do it. You might need to re-design your web site to keep up with the times. You might need to create a referral contest to reward the customers that give you the most referrals. You might offer to treat every employee to dinner if customers rate you an average of 90% or above on your customer satisfaction survey. All these marketing activities require money, and they are in addition to your advertising budget.

That’s why we only tell you to spend 1-5% of your revenues on advertising. This leads to the question…When should you spend only 1%, and when should you spend 5%? Here’s the answer. If you want slow, steady growth, spend 1% of your revenues on advertising. If you want fast, steady growth, spend 5% of your revenues on advertising. None of these will make your company grow too fast. Your growth should be steady whether you spend 1% or 5% on advertising. So it comes down to how aggressive you want to be. If you want your company to experience fast, steady growth, put 5% of your revenues into advertising. If your goal is slow and steady growth, 1% of revenues would be enough.

There is something you need to watch out for, however. Just because you’ve spent 1-5% of your revenues into advertising does not necessarily mean that you’ve done a good job at advertising. You have to direct the money into effective advertising programs! There are some business owners that look at their advertising budget and say, “Hey! I’ve spent 5% of my revenues on advertising. That means I am doing a good job!” Well, not necessarily. Are they spending 5% of their revenues into effective advertising, or are they just wasting this money?

What If You Are Out of Money?

While we are talking about how much money to spend on advertising, some people say, “But I am out of money! I don’t have enough customers coming in, and I don’t have the money for advertising…What should I do?” Great question. The answer, as you might have guessed, lies in using marketing techniques that are inexpensive to do.

Often times, the business owner feels down when the business is low on cash. The owner’s attitude affects the employees’ attitude, and everyone gets into a slow-paced, low-energy, apathetic mood. The morale is low, and no one feels excited. You need to turn that around. You need to explain to your employees why it’s important to provide an excellent customer experience, and why it’s important that everyone stays positive and enthusiastic. You need to explain to your employees that the more positive they are, the more customers will come, the more your business will grow, and the more likely they are to get raises. You need to explain to your employees that if they stay negative, you might go out of business and they won’t have a job any more. Make it a team effort to amaze your existing customers. Implement systems and train your employees so your service will amaze your customers every time. Make sure the workplace energy is high, and everyone smiles and works with enthusiasm. Tell them that this might be the one thing that saves the business from going under. If everybody manages to pull it off, have a big celebration!

The next thing you need to do is to ask for referrals. You can’t expect customers to give you referrals. You have to ask. For example, if you own a web design consulting company, it could be as simple as saying, “Do you know anyone else who might benefit from a website redesign?” It could be offering to take R200 off their bill if they give you the names and contact info of anyone they know that could benefit. It could be mailing a thank you card to your existing customers, and on the thank you card itself, offer a special for the customer to come back again, and a special for the customer’s friends and family. You could design a whole system where if they give you one referral, they are now a Silver VIP; if they give you two referrals, they become a Gold VIP; and if they give you three referrals, they become a Platinum VIP. Each level of VIP could receive different benefits. There are lots of ways to generate referrals, and your consultant can help you determine the best way for you.

The next thing you can do is to attend referral-generation groups. One example is the Chamber of Commerce. You get to know the people in the group, and you start to give each other referrals. There are lots of other referral-generation groups – some are more structured than others. There are groups that require every participant to pass two referrals to others every time they meet. There are groups that cost money to join, and groups that are free to join. Some groups might have membership requirements. For instance, there is a group that is composed of only the advisors for small business owners. If you want to be a member, your clients must be small business owners. So there would be one accountant that specializes in serving small business owners, one attorney that specializes in serving small business owners, one financial planner, one insurance agent, one web designer …so on and so forth. Every two weeks, these advisors meet and pass referrals to each other. The financial planner might say to the web designer, “My client needs help on website issues. She thinks her Flash site is not getting her ranked properly. I’ll send her over to you.”

When it comes to joining these groups, you have to choose the group carefully. Some are just a big social event where everyone chats with each other; some are very formal, structured, you pass the referrals and you leave. If you are thinking about joining a referral-generation group, definitely talk to your consultant. He or she would be able to help you choose one that fits you.



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