With marketing’s biggest challenge achieving demonstrable ROI, web expert Keir McConomy takes a look at the way SMEs can take control
When you start a new business there are lots of people telling you to try this and that way of marketing, as though it’s the law. They tell you that you have to advertise or you have to go to trade shows.
But with figures showing that more than half of all new ventures in Britain close within three years of opening, if there is no return on these marketing investments within a fairly short time frame, the chances are you will run out of cash before you reach your first anniversary.
It all boils down to ROI…return on investment. Most people would agree with the idea that ROI is difficult to measure for many marketing activities. In that case, don’t do them!
New businesses cannot afford to gamble their precious start up capital on things that ‘may’ work. As with everything, there is a smart and a not-so-smart way to go about the marketing of a new business. Here are my top seven steps to achieving marketing ROI.
1. Is there a bottom line benefit?
Don’t be fooled by people who tell you that you need to advertise for awareness. That is a luxury of the global brand. You need to advertise for new business leads.
It may be nice to sponsor your son’s football team, but will it bring in new business or just a load of muddy shirts every Sunday? Before investing in anything consider carefully what you want to get out of it and what, realistically, it offers.
2. Go for scalability.
Look at the marketing activity and ask yourself: if this works can I invest more and continue to get the same level of return, or will I be a victim of diminishing returns?
Equally, if you are onto a winner the law of product lifecycles means that you only have a limited window before the competition catches up or technology supersedes your service. So your new business model needs to be able to be ramped up, and quickly.
3. Go online before you go offline
It is amazing how many SMEs still do not take advantage of the Pay-Per-Click advertising on Google and Overture (Yahoo etc). This is a highly effective and manageable form of advertising, which gives you excellent ROI so long as you are careful about the search terms you choose.
The more specific you are, the cheaper the cost per click and the better the conversion rate. For example, ‘accountant’ might cost £2 per click, but ‘accountant in Tamworth’ might only cost 10p per click and would be much more suited to your needs if you only operate in the Tamworth area!
My own company does a step on from Pay-Per-Click which is Pay-Per-Lead, where rather than pay for each click to their site customers only pay for each genuine business lead they receive. If no leads are received there is nothing to pay – thus giving customers demonstrable ROI.
Online marketing spend increased by 70% between 2004 and 2005, so if you are still not taking advantage of online lead generation, you risk being left behind while your competitors race ahead of you.
4. Avoid long-term commitments
Sounds a bit like a horoscope recommendation but that doesn’t make it less valid. Don’t get into unnecessary long-term deals; it’s easy to get suckered into a run of adverts or a fixed term PR contract that you just cannot get out of.
It seems to make sense, but if you lose your biggest client and all of a sudden cash flow is tight, then you could really use that cash to pay the staff or the rent. I remember a client once booking adverts on 100 London Taxi cabs.
In a whole year he never saw his own ad once, despite working in London. No payback. No way out of the deal. A total waste of money.
5. Work to a plan and a budget
The best way to avoid unplanned marketing activities with no certainty of ROI is to have a costed plan. If there was never any intention of advertising in Scunthorpe Business Weekly then you will have no problem telling the rep that approaches you with the last minute offer, that it just is not part of the plan.
Likewise, if people try and persuade you that if you don’t go to SME Expo 2007 people will think you have gone bust, then let them think that. It’s not part of the plan!
And remember, businesses that develop and use a marketing plan go on to out perform those that don’t by an average of 30%.
6. Don’t go bloodhounding
You know the situation. You get a call and you are so glad someone wants to talk to you that you set off like a bloodhound without qualifying the prospect.
The trouble is that many SMEs rely on cold call telemarketing where we convince ourselves the contact wants to buy our products or services.
It is far better to get prospects to call you because they know what you have to offer and have a genuine interest in your services.
Then, if you need to make a personal visit you will at least know there is a likelihood of some business coming your way.
7. Network like your life depended on it.
It only costs a little to stay in touch said the tired old BT. And it’s true. Some of the best ROI marketing you can do is to start networking with old clients, former colleagues, schoolmates, prospects, suppliers…anyone else who knows you!
Ask them for referrals. Better still, get your entire workforce to build their own networks and get them to ask their contacts for referrals.
Pay them for each referral if you need to. It’s amazing how much quick business you can bring in without so much as placing an ad in Yellow Pages.
The key thing in running a SME marketing programme is to be ruthlessly honest with yourself. Ask yourself honestly where did my new business come from, and then go back and do some more of what really gave you a measurable ROI.
Don’t try and convince yourself it was the charity golf day that did it when you know very well that it was the phone call to your old client or the £12 you spent on the pay per lead site, or even the 20p you spent on pay per click for the search term "Taxidermists in Towcester".
Effective ROI in marketing for the SME is rarely glamorous but I thought you said you were in business to make money not win beauty pageants.
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