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Strategy First. Let me say that again… Strategy First. Taking the Time to Develop a Marketing Plan is Vital to the Success of Your Company.
Do Not Spend Your First Dollar on Marketing Without a Clearly Defined Strategy
The biggest mistake any business can make is to spend any money on advertising without developing a clear strategy and then reducing that strategy into an actionable plan.
Whether you are a brand new business who has yet to open their doors for the first time or a successful business with 50 employees growing each year, you still need a marketing plan.
And let me speak to the currently successful business. If you aren’t operating from a plan, you are at an even greater risk of failure at some juncture than a company that is new or struggling. If you stop and listen, you will hear the footsteps of your competitors. They are strategizing to overtake you precisely because you are successful.
Think of a successful sports franchise, such as the New England Patriots. How many of their coaches, players, and even playbook and football approaches have been taken by other teams trying to replicate their success?
Do not wait until you stumble to develop an operational marketing plan that targets the types of customers you want to grow your business with and how best to utilize your marketing dollars.
What should be in a good marketing plan? Think Street believes that there are 6 questions to ask, and the result of which should be the framework for your marketing plan.
1. Who is Your Target Customer?
Many small business owners make the mistake of thinking that their product or service is right for everyone. It isn’t. As a result, so many businesses, especially local, small-town businesses, waste a considerable portion of their marketing dollars attempting to appeal to an audience much broader than is necessary.
Let me give you an example. Say you owned a shop that sold fishing bait & tackle. The first thing you should do is determine who your best customers are. You might do that by examining a year’s worth of sales receipts for the products and services that were most profitable for your shop.
If you sifted through those sales receipts, specific patterns would emerge, and based on that information, you could create the ideal customer profile. What are their age, gender, and interests? Where do they live, work, and fish?
Simply put, you need to evaluate who are your best customers are. This is often referred to as “low hanging fruit.” Understand that you offer certain products or services that are more profitable and that you like selling. Let me say that again – what do you like selling the best?
Ultimately, if you don’t focus on that product line and those customers, you will instead allow the people who randomly walk through your door to dominate your sales. You won’t be as profitable or as happy. Long-term, you will run your business into the ground.
2. Who is Your Competition?
The next step in developing your marketing plan is to do a thorough market analysis. Who are your 3 biggest competitors? What are they doing right? How do they advertise? What do their websites and social media accounts look like?
At Think Street, we use several tools to gain insight into your market and your competition – right down to what keywords they rank for on Google. Don’t think that is important? How do you think your customers are finding you?
This process is called conducting a Market Analysis. It needs to be part of your marketing plan, whether you are a $100 million company or just starting out of your garage.
Something else that we recommend is that you examine other markets. Who is the best electrician in a similar-sized community in a completely different part of the country, and what are they doing that works? Go to their websites and social media accounts and see what is working.
3. What Makes You Better?
What is the unique advantage that made you start your business in the first place? If a customer asked you what makes your business better than your competitor, what would you tell them?
Look, in many communities, the competition is considerable. You need to clearly define what makes you better and tell your prospective customers. Trust me, they don’t just want to go to a car repair place – but instead, they want to go to their area’s best mechanic who specializes in the problem they need to be solved, offers better hours and guarantees.
You need to differentiate your company in a clear and defined manner. It needs to be a big part of your marketing strategy.
4. How Do You Best Reach Them?
So you have identified your best target customers, researched your competition, and determined what makes your product or service better. Now, you need to decide how best to reach your customers.
The choices seem endless, and in large part, they are. It is hard to know what works and what doesn’t.
The starting point here is looking at where you are currently spending your advertising dollars and how effective is this effort? Many companies don’t track their marketing dollars. The result is that they spend money on whatever sounds good – or they were asked to spend their money on. Worse yet, they keep spending money on the same marketing avenues that have for many years — while their best customers have changed how they get their information and entertainment.
Today, a 30-year-old doesn’t watch broadcast tv, listen to traditional radio, read the newspaper, or look to the phone book when searching for service. So why are so many businesses directing a large part of their advertising budget on these mediums?
Then where do you find your best new customers? Well, you’ve already created a profile of who they are. Now, why not ask them? In fact, why not ask every new customer how they found you?
I have owned a business for 30 years, and EVERY new client is asked, “how did you hear about us.” It is part of each message taken for a new client. Our employees are trained to ask this simple question, and it is part of a checklist that sits next to each phone.
I have learned a lot from the answers to these questions. I have also found that my clients aren’t always exactly truthful in their response. A standard answer is that a friend referred me. The truth is, often they heard our name from more than one person, and then they did some research. They checked our website, our reviews and might have even asked others. But that is great because part of our marketing strategy includes those avenues.
I also nearly always get into a discussion with a new client, and in that process, I try and determine where their sources for information are.
Sometimes, deciding what venues to spend marketing dollars on is trial and error. But that is ok, and understand that ROI (return on investment) is much more instantaneous now that it has ever been for small-business owners. It used to be that you had to commit to long-term contracts and commitments. Now, you can spend a little money on Google targeting people searching for a particular product or service, track the results for a few days, and then adjust the amount you spend accordingly.
5. How Much Money Do You Spend?
We think that you should be spending at least 5% of your gross sales on marketing. The U.S. Small Business Administration recommends spending 7 to 8 percent of your gross revenue for marketing and advertising if you’re doing less than $5 million a year in sales.
That said, you have to control how that money is used and track the ROI for each piece of your marketing strategy.
6. What is the Optimum Timeframe?
The last piece of a marketing plan, and one of the most important, is a marketing calendar based on growing your business. Every business has slower times and busier times. One of the goals of marketing is to fill in the gaps to equalize the flow of your business.
Now, understand that some businesses, by their very nature, are seasonal. No one in Michigan gets their air conditioning fixed in January. But rather than waiting until July, a company could push marketing service agreements for air conditioning systems in May or September, which may be a slower time for this type of work.