In this age of online marketing, social media, “Organic Search Traffic”, and traditional marketing like post card mailers, many small business owners are confused by which method will give them the best return on investment. Make sure you start by reading the article I posted Friday, “Paying for Growth” which will give you an overview of the basic marketing philosophy of cost per customer and value per customer.
Today, I am going to give you 5 TIPS on increasing your marketing ROI for your small business. As always, I am specifically trying to help brick and mortar businesses like retail, restaurant, auto repair, etc. So let’s dive in!
#1 – Embrace complexity. Many small business owners I meet want to increase their ROI but they don’t want to involve themselves in the messy world of online marketing. You can send out a 20,000 piece mailer and get a pretty accurate idea of your response rate before you even send it out. Many times the marketing agency will provide this as a benefit. “This campaign will pay for itself.” This seems like the safe choice and it is. However, it is also the more expensive choice if it is not tied into an overall marketing strategy that includes social media engagement, pay per click advertising, etc.
#2 – Define your target market. The first step in increasing your ROI is to define your target market. The beauty of marketing through services like Facebook or Google Adwords is that you can now spend money to target individu
als who fit your description. Where does your target audience live? How old are they? Do they have children? What are their other interests? Any money you spend targeting someone outside of this audience is a waste and will drive down your ROI. Once you have your target market clearly defined, you are ready to move on to the next step.
#3 – What do you want them to do? The key to increasing your ROI is to create a list of specific action steps that are enticing for your target audience and will lead to profits for your business, then put a dollar value on each one. In our online marketing program, we help our clients identify and place a dollar value on certain goals. Here are a list of action steps that I have compiled:
- Make a Purchase in Your Business – This is the obvious end goal for all your marketing efforts. What is the average purchase and how much profit do you make on average?
- Refer a friend to your business – This is without a doubt the most valuable interaction outside of a customer actually making a purchase.
- Sign up to receive your email / text message updates – This is usually a highly valuable interaction that gives you virtually free access to market to an individual indefinitely.
- Like your Facebook page / Follow you on twitter – This is not as valuable as your business having their email or phone number directly but it also has long term value.
- Print or Download a Coupon Offer – For certain types of businesses you may want to track when someone prints or downloads a coupon from your website.
Now you need to get specific with each of these. Think about the customer experience and what you are going to provide. For instance, how often will you send out email / text updates and what will they contain? Is your Facebook page an active community where you will engage with your customers or should you mark this off your list for now because you are not actively using Facebook? What special offers make sense for your business and which of these will really grab the attention of your target audience?
#4 – How can you get them to take these actions? This is where your marketing strategy comes into play. Analyze each of the activities above and think about how you could get people to take this action. What will lead up to it? Call in some reinforcements from a firm like ours if you need help creating your strategy, but your goal needs to be to identify concrete action steps you want your target market to take and then reduce the marketing costs necessary for them to take these action steps. Don’t be afraid to have a strategy with more than one step. In the past, it was simple. They see my ad, they come buy something. Today it might be, they see my facebook ad and like me on facebook. Within 30 days they subscribe to my email list where they get a coupon offer. Next they bring the coupon in and purchase something. This is a much more realistic path in today’s market.
#5 – Information is Money. In life, we have been taught that time is money and this is of course true. However, in marketing, information is money. The more information you are able to bring into your marketing strategy the less expensive it will be. For instance, if you run an ad campaign on facebook for everyone in your target market you will get a pretty good response but of course this will cost you. If instead, you know that men between the ages of 19 and 30 are most likely to take a certain action that you have identified, you can run an ad on facebook and probably reduce your marketing costs by 50% or more. If you take it one step further and you have collected email addresses and buying habits on your customers and you create a list of customers you want to target specifically for an offer based on their buying habits and tailor a marketing message just for them, Facebook will let you load up this list of email addresses, find those individuals and target them with Facebook ads and promoted posts. This last example would probably be 90% less expensive than the general ad above achieving similar results.
It is vital in this new marketing environment that you collect information. If you don’t know the buying habits of your customers and if you can’t tie those buying habits to real people that you are connected with through email or social media, the time has come to overhaul your strategy. You need a system that tracks buying habits and collects information because this information can drastically reduce your marketing costs which in turn will increase your return on investment.
I hope this post will help you start working on your marketing plan to reduce your marketing expenses while increasing your ROI.
Have a great day!
James Shepherd
