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Marketing and advertising can become a black hole in your business, drawing in money and resources and giving little back – Domini Stuart looks at smart planning that targets your market and makes advertising dollars work hard to grow your business

If you fail to plan, you’re planning to fail. It’s an old chestnut, but one many small businesses overlook when it comes to marketing. And so they don’t get the returns they could, and the money and time wasted can seriously impact on growing the business.

"Advertising is what they buy when a sales rep calls with something that sounds like a great offer," says Matthew Byrne, lecturer in Communications at the University of Technology Sydney. "While $10,000 might buy you a good deal for a radio commercial, it won’t if you have no idea what you want to say, who you want to say it to, or even whether your target market listens to radio.

"Planning forces you to think strategically and to focus on what you want to achieve. That way, when a rep calls, you’ll be well-placed to judge whether the offer is appropriate for you."

Many SMEs think of advertising only in terms of TV, press, and radio, but Per Edwards, director of The Bakery communications, says the marketing plans he creates for his clients may not include any traditional advertising. "It depends on your target market," he says. "Your first step in creating a plan is to establish who you want to talk to. How you talk to them will grow out of that.

"Think about the characteristics of good customers. What are their needs? How do they get their information? Remember, you’re not necessarily your own best customer. The magazines they read and the TV programs they watch might not be the ones you choose.

"Where are your sales actually coming from? You may have 500 clients but nearly every business follows the 80–20 rule, with 80 percent of profits coming from 20 percent of customers. What are the qualities of that 20 percent?"

And the best way to find out about your customers is also the most simple: ask them. "Create a little survey—just three or four questions—and train your receptionist or sales people to ask these every time someone buys something," Edwards says. "We’ve all heard the saying that ‘50 percent of my advertising is wasted, the trouble is I don’t know which half’. But if you ask every customer ‘where did you hear about us?’ you’ll be able to see exactly what’s working for you."

Every business should have a database, and you can start entering contacts from day one. "Use it regularly," says Edwards. "Remember it costs seven to 10 times as much to attract a new customer as to retain an old one.

"One of my clients has a database of some 30,000 customers. His website does at least three to four times as much business as his kitchenware shop. Sending out a newsletter each month is extremely inexpensive, as are friend-get-friend type promotions. If you can use the web it’s extremely cost effective."

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Changing your perception will go a long way, too. "Many SMEs say they don’t have money for advertising, but advertising is anything that brings you into contact with another stakeholder. Everything you do should be focused on building a brand," says Byrne. "Business cards, sales presenters, boxes, uniforms, T-shirts, shopping bags, the back of your car, they’re all advertising. That’s why one of the best investments you can make is paying a good designer to create a memorable look and feel for your business. You can then produce most of your collateral on your own printer.

"Everything is a medium. For Nudie juices, the first primary advertising was their delivery cars. This was highly effective because their cars were unusual and funky enough to attract attention. It’s easy to forget, but your aim is to get people talking. And the best advertising will always be word-of-mouth; we use other means because we can’t get that to happen quickly enough."

In his book Purple Cow, Seth Godin writes about ‘sneezing’ your message into the marketplace: the viral approach. "Viral emails can work well for very little cost," adds Byrne. "It infuriates me when marketers say things like ‘we broadcast 200 emails a day but no-one replies’. To keep doing the same thing and expecting different results is the first sign of insanity!

"Effective emails follow the same principles as any other form of print advertising—a grabbing headline with benefit-driven copy that talks to you in a personal way."

SMEs often have plenty of product, and Byrne recommends getting it in front of as many in your target group as possible. "I have a bag made by Musto, a brand which means a lot to me but nothing to people who aren’t sailors," he says. "They have a very specialist market, and so, as well as advertising in specialist magazines, they give away jackets to sailing schools. This is perfect product placement. The students came out thinking Musto is the brand they have to have."

Kerwin Rae, regional director of The Quantum Organisation, has helped a number of clients to grow their business with a joint venture. "You need to find someone who isn’t a competitor but has the same target market," he says. "For instance, for one Mother’s Day promotion a jeweller put a real diamond into a bowl of cubic zirconia. The bowl sat on a newsagent’s counter and customers who spent more than $30 there were invited to dip into the bowl.

"The only way to find out whether the stone they had chosen was the real thing was to take it to the jeweller. He’d then point out that if they couldn’t tell the difference, neither could anyone else—would they like the stone made into a ring, or buy another one for a set of earrings? Many took him up on the offer. And the person who did win the diamond had it made into a brooch with several other stones.

"This promotion drove the newsagent’s average dollar sales up by 30 percent and increased the jeweller’s business by 300 percent."

And while you want your advertising to reach as many people as possible, it’s important to understand the limitations. "With $10,000 to spend you would barely whisper to the whole of Sydney, or even the North Shore, but you could shout your message to people on the Northern Beaches," says Byrne. "This could generate enough revenue for you to spend, say, $20,000 on your next promotion and gradually expand the area you reach effectively."

It’s also important to realise that unless you’re creating advertorial-type messages, don’t expect sales from your advertising; your customers won’t have enough information to make that decision. "Advertising generates leads, the product generates the sales," continues Byrne. "If you have 10 leads and no sales you have a problem with your product. If you have 10 leads and 10 sales you’re not generating enough leads."

Return on investment is notoriously difficult to measure, mainly because the impact of your advertising may continue over several years. "Try to define lifetime customer value, how much will they be worth over five years," advises Edwards. "You might not recoup the $30,000 you spent on an ad immediately, but repeat custom could bring in much more than that over time."

Advertising should always be a process of testing and measuring. "But don’t use a $10,000 ad as a test," says Rae. "Use direct mail to test three or four variations in the headline and the offer, then use the most successful combination to create your magazine or newspaper ad."

The bottom line? "If any advertising doesn’t pay for itself, don’t do it," says Rae.

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