In our experience at the London Coaching Group, business owners have often held onto 3 ideas that keep them from implementing successful marketing strategies that will grow their business quickly and eventually make it highly saleable:
1. Small business marketing is a big cost
2. We should have a marketing strategy that reaches as many people as we possibly can
3. Our strategy should help us "get our name out there"
We often hear these things when it comes to marketing and it is disappointing to learn that they simply are not true. The truth is, if you continue thinking this way, your marketing is unlikely to get you very far.
There is an alternative formula for marketing that can help turn around a sinking strategy and bring in quality leads while – most importantly – recovering its own costs and scaling the business quickly and sustainably, increasing its value as an asset that you can sell for a much higher price.
Stage 1: Begin by identifying your Measurable Marketing Objectives (MMOs)
Be specific as you can about who, where, what and how. Measurable really is the most important part of this – put an actual number to this. One example for a flooring company might be:
"Acquire 75 qualified leads through interior designers in quarter 2 for the main flooring installation service."
To get this number, you will probably want to start by looking at your Measurable Business Objectives (MBOs). These should be equally specific and should outline where you want your business to end up. Your marketing should then be working towards furthering those objectives. If you are not aligning these, then what is the point of your marketing?
Stage 2: Closely define "who" your marketing strategy is for
You may think in the example above that "interior designers" is a nice, specific target market. In reality, that is actually more of a loose target.
Most people think of marketing as 1 to many – promoting your product or service to a crowd of people. The so-called "target market". The truth is, target markets don't work. What you should be thinking is marketing 1 to 1 – sell to an individual person, and then do that many times over.
Before you start really working on an unlimited budget marketing strategy, you need to define not your target market but your target person. What does the ideal person you are selling to like? What are their typical issues and roadblocks? How does this person communicate?
If you need help trying to figure out who this person is for you, here are a few considerations:
• This person should be really interested in your business
• This person should provide high average value to you (i.e. when they purchase from you, it should be worth it)
• This person should be likely to come back over and over again
• This person should be quite easy for you to communicate with
• This person should have a lead time that makes sense for you
Try choosing a previous or a current client who you wish all your other clients were like. Write down whatever it is you know about them – no matter how insignificant – and then build up your target person around that.
If you really want to develop your target person, try interviewing someone that represents that person – maybe the person we just suggested you start writing about. When you interview them, you will get actual facts about them instead of trying to guess what they want and like.
Stage 3: Choose a communication strategy
Start to see from your target person's point of view and try to understand what motivates them.
What you need to do is understand what their problem is, and then articulate that problem better than they would be able to.
Once you do that, they automatically attribute you with the solution.
A good way to map this out is with the following graph:
You can then fill these four quadrants and truly relate to your target person. You should aim to have about 3 of each.
• Immediate & Away are the "frustrations" – the things that are in the way right now and your target person wants to end.
• Immediate & Towards are the "wants" – these are what your target person would like to have right now. These are usually the positive reflection of the frustrations.
• Imagined & Away are the "fears" – these are the potential problems that your target person can see coming. Think of it as if their frustrations would add up over time to result in these fears.
• Imagined & Towards are the "aspirations" – so the things that your person eventually wants to happen. Similarly, you can see it as the wants adding up over time to become an aspiration.
This map usually helps in considering the different perspectives of your target person, and also in formulating a marketing strategy for each issue or desire quite specifically.
Stage 4: Calculate your acquisition costs
Your next task is to think about how much budget you are allowed to spend on acquiring a client. This is incredibly useful and, unfortunately, something that many business owners miss.
Start with the gross profit of your products. This means taking the price of your product and subtracting the costs involved in producing it. This does not include the costs that are universal to your business – only the costs that would change with the number of products you sell.
Your gross profit is the absolute maximum you are allowed to spend in acquiring a customer. If you spend more than that, you are costing yourself money instead of earning.
Let us return to the example with the flooring company. Assuming the flooring installation is priced at £800 and there is a gross margin of 30%. This means that there is a gross profit of £240 – and that is the allowable acquisition cost of one lead.
A step further is to understand that a single client – an interior designer in this example – would not just buy from them once. The average customer may buy twice a year, so their lifetime value goes up. That means that the gross profit that you actually get from a single lead goes up to £480 and thus the acquisition cost can also go up.
Depending on how risky you want to get, this budget can go higher or lower.
Stage 5: Choose the channel, offer and cost
If you are an SME of any sort, rather than a corporation, you will want to focus on brand activation and NOT awareness campaigns. This means everything you put out there should have clear calls to action (CTAs) and should also provide motivation for prospects to take that action.
The market is crowded, so you need to give people a reason to choose you over someone else. The best way is to give them an offer with it. A simple and effective example might be, "Get a £100 voucher towards your next order when you call us on XXX."
Once you decide an offer, decide what channel you will use to communicate and how much you plan to spend on it. This does not require a stab in the dark – it requires careful measurement.
Your allowable acquisition cost calculated in step 4 gives you a benchmark from which to work out how much you want to spend. Calculate how much each lead costs for the channel in question using the typical conversion rate of the channel.
Understand the predicted cost per lead of the channel, take that away from your gross profit and grade your different marketing channels accordingly.
You can then easily see which channels are likely to be worth it for you.
Stage 6: ROI – what is the return on your marketing strategy?
Once you actually start spending some money, carefully measure the return as you go. Do the same calculations you did to predict the cost per lead of the channel, but this time with the actual spending and actual conversion rates you are getting.
When you do this, you can determine which channels in your marketing strategy are actually working out the way you planned.
If the net result of any channel (that is, once you take away the cost of the channel from the profit you have gained through the leads from that channel) is positive – even a very small positive – then the costs of your marketing have been met. Which means you should be doing that over and over again – and you have just created your very own unlimited marketing budget.
Stage 7: Automate it so it can keep running with minimal effort
Once you have worked out a marketing strategy that clearly works and recovers its own costs, you should systemise it so it can run easily over and over again.
There are a range of automated systems and technology that you can apply to help you do this. Alternatively, you can train your team to maintain the process without your constant involvement.
You then have freed up your time to start the process again so you can seek out further sources of unlimited marketing budget.
This article was contributed by The London Coaching Group, top business coaches in London who help businesses grow quickly and sustainably to the next desired level.