Unless you live under a rock, you have probably noticed that we are dealing with a tough economy and there is plenty of uncertainty. What often happens during difficult times is that businesses look at their budgets and want to make some cuts. Unfortunately, the first cuts are often to marketing. I would argue, this should be your last cut, and you should actually increase your advertising spend.
Simple Logic! As a business, you are concerned about the economy and you want to increase sales and lower your expenses. With inflation, there is a good chance that your cost of goods will increase and it may become necessary to raise your prices in order to keep a good profit margin.
In order to successfully raise prices, you need to justify to consumers WHY your product or service is undervalued. You can't just expect consumers to pay more for a burger if they think it stinks or they don't even know it exists. Thus, you need to market yourself in order to convince the consumer that they are getting a great deal.
What's the alternative? The alternative is what most small businesses do (which is why 9 out of 10 small companies fail). They cut their marketing budget in order to buy inventory. They are then stuck with inventory they can't sell so instead of raising prices, they offer discounts so they can get the product out the door and you guessed it....BUY MORE at higher prices. This reduces their profit margins and forces them to make more budget cuts. It's a vicious cycle which eventually leads to them closing their doors.
What's the solution? Strategic Marketing! The advice to spend more on marketing does not mean you should waste money. What's your ROI (Return On Investment)? Especially during tough times, you need to be very purposeful about each marketing dollar:
Develop a marketing plan with a budget. The majority of businesses I consult do not have a marketing plan or a budget.
Spend the majority of your marketing budget on your target market. Who is your ideal customer? Where are they located? If the advertising isn't hitting your target market, then don't do it.
Reward your loyal customers. Client gifts help with retention, referrals, and can be a great advertisement for your business.
Measure Your Results. A good marketing campaign takes six months to a year and should be measured quarterly. When comparing statistics, you should compare quarters against the same period from the prior year. For most businesses, you won't get accurate results if you compare the 4th Quarter (Holiday Season) against the 1st Quarter (January - March).
I often say the best way to measure your results is to ask the question "Do I have more money in my account as a result of my marketing efforts?". If the answer is YES then continue. You may even want to increase your budget so you can dominate the market. If the answer is "NO", then do a deeper dive to determine which of your advertisements is failing and why. DON'T BE FOOLED! A lot of advertising companies deliver fancy analytics and confuse you into believing it's working. The real way you know it's working is because you have more money...and if you don't, you may need to make adjustments.
Make Adjustments - Sometimes when the answer to the question "Do I have more money in my account as a result of my marketing efforts?" is "NO", that doesn't always mean your marketing isn't working. However, it does mean you need to make adjustments. When looking at your analytics, if you determine that traffic is being driven to your website or store, yet you're not seeing conversion, then that's an indication of another problem. Ask the following questions:
a. What happens when I go to my website or store? Is it easy to make a purchase?
b. Are my employees aware of the advertisements?
c. Is my advertisement hitting the right demographic? Do they have money?
d. Is my price aligned with my competition?
Look for Partners - The biggest mistake companies make when preparing marketing and advertising budget is that they dismiss marketing ideas solely based upon cost. Cost needs to be the last factor in evaluating a marketing budget, rather a Company needs to answer the following questions when it comes to advertising or marketing ideas:
Will the advertising properly represent my brand?
What are the demographics of the advertisement or will it go to my target market?
What is the size of the audience?
What is the cost per impression?
Final Cost
If the advertising properly represents your brand and is directed towards your target market, the next question is value. Just like any other product or service, you have to ask if you’re getting a good deal; if you are, then evaluate whether or not your company can afford to pay for the advertising; if the answer is “no”, then look for partners. If you see the value, chances are they would be willing to participate on a Co-op basis.
We're here to help! We understand the concerns you might have as we navigate this economy. Please be comforted in knowing that our team has the experience to help you succeed. Feel free to contact us for a free consultation.
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