Thursday, July 15, 2010

Simple Marketing, pt 1

In a previous post I discussed how to eliminate typos in printed material.  And in the last one I explained how to save money in your advertising budget.  A few subscribers have asked me how they should advertise.  To answer this, we're going to develop an easy yet powerful marketing strategy for your business.

Developing Effective Marketing Strategy
Before your eyes glaze over at the phrase marketing strategy, let me reassure you this doesn't need to be complicated.  Your marketing describes who buys what from you and how they get it.  Many small businesses and even some larger ones often launch a product without a solid market strategy and make corrections after the fact.  But that's like aiming after shooting.  You can hit the target more often and eliminate many costly pitfalls if you do a little prep work.

Everyone knows that companies need to advertise to get clients. But many view the concept of advertising as a black box with an indeterminate benefit.

The reason a business advertises is to be visible so potential customers can find it.  But arbitrarily spending money to shotgun your name in front of an untargeted group of people may or may not attract an audience.  And they may not buy unless you're attracting the right audience.  For your advertising to be effective, you must know who you are trying to reach and how to find them.  Until you have a marketing plan, any advertising is just a gamble.  You might as well throw darts at a board to choose your media and hope for the best.

A marketing plan will reveal where you should apportion your advertising budget, and that's why we're going to create one in the next few posts.  By the end of the fourth column, you'll have gained a better understanding of your customer so you create ads and select media that broadcast the right message and attract the right people.

How do we create this plan?  Initially, we want to answer four questions:


  • Who is your ideal customer?
  • How to best reach them?
  • What do you tell them?
  • What is their value?
    We'll take the first one in this post.  We'll answer the last three in the next few columns by applying a thought experiment and some common sense.


    Who is your Ideal Customer?
    Determining one's ideal client can be as simple or as complex as you choose.  Large companies use vast computing power and sophisticated techniques to mine huge customer databases and group similarities.  You can achieve a rough estimate with just a little time and effort.

    To answer this question we need to use your accounting software, a program like Quickbooks.  You want to determine who among your customers annually brings in the most profit.  Run a profitability summary report that lists each customer and the profit they made the firm.  If you don’t use software, we're calculating profit by subtracting cost of goods and labor from the sales price.  As long as your margins are fairly uniform, you can be inexact.

    List the characteristics of your most profitable clients and look for commonalities.  Group any facts, the hard data that describe this segment.  If you target consumers, look for similar locations, income levels, ages, occupations, and the like.  If you cater to businesses, look for common industries, company size, type of company.  Then consider the feelings and attitudes that influence thoughts and buying behavior.  Practice empathy and get a good picture of why this segment buys from you.

    Ask a few of your customers to corroborate your results.  Ask why they sought you out, and also why they stay.  Then ask them who else could use your offering and why those customers specifically would find your offering valuable.  Sometimes your presumptions will have been right.  Often they'll be wrong.  This exercise will confirm concrete reasons or show that you need to do more research.

    Once you've determined some commonalities of your most valuable clients, we need to find you more of 'em.  We'll do that next week.

    Please continue to ask questions in the comment section.  Tell me what you want me to address in future posts.  Thank you for all the support!  Until next time,

    profitable business All!

    4 comments:

    1. I am starting up a new business, what is the best way to discover the group you are trying to market to when starting up a new business? Would these marketing principles apply to smaller businesses? I really like the idea of laying out your most profitable client base and identifying what they look like. I can make a prediction based on what I think my customer base will look like and make adjustments as my business begins to take off. Once I get a picture of what my client looks like what recommendations do you make for changes, packaging? promoting?

      ReplyDelete
    2. Hi JN,
      Thanks for the comment. First of all, great question! I was remiss in ignoring startup businesses.
      You're on target with the approach to a new business: plan your marketing based on your prediction and analyze and tweak as you accrue data.
      These ideas have been used by Mom & Pop shops all the way up to the largest corporations.
      We'll be answering how to tailor your marketing presentation in a later article. But essentially you can tweak any aspect and then test to see what approach works the best. The key is to test only one variable at a time.
      Thanks again for your comment and keep reading.
      pb All,
      Chris

      ReplyDelete
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    Chris Blanton currently works as a business advisor, investor, and teacher. He is passionate about judo, ballroom dancing, great writing, and finding elegant solutions to thorny business problems. Subscribers can reach him via email at bizDoc@bizDoc.e4ward.com. He tweets under the handle @cmblanton.

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