Big Issue for Small Business
Part 2: Does Marketing Work for Small Businesses?
By Kelvin Golding FCIM, MOST Marketing Ltd,
CIM Small Business Ambassador & Wenta trainer
This is part two of my series on marketing. Part one covered what marketing and branding is really about, it is recommended that you give that a read before continuing below. Read ‘Big Issue for Small Business Part 1: What is marketing?’ here.
The value of marketing for small businesses
A Chartered Accountant once shared with me their perspective on marketing: "There are only so many pennies in a pound you can save; marketing creates value. Often businesses are so focused on saving pennies that they are losing pounds!"
According to one of the world's largest consultancy firms, marketing contributes three times more value to any business strategy than any other organisational function!
Based on the largest international study ever conducted on the value of marketing, the most successful companies invest five to seven percent of their turnover in marketing (excluding personnel) consistently.
“Business has only two functions - marketing and innovation. All the rest are costs. The aim of marketing is to know and understand the customer so well the product or service sells itself.”
After being involved with over 500 small businesses as a marketing director, SME marketing expert and marketing trainer, it is apparent to me that most small business owners do not know what the true purpose of marketing is (to create value) and how to do it (segmentation, targeting and positioning supported by market research).
Without a marketing audit and cohesive plan, business owners tend to focus on one channel/tactical communications, rather than on ‘integrated marketing’ (based on media neutral planning i.e. understanding the best way to reach customers before you choose the channel!) aligned to strategy that encompasses the marketing mix, measured by metrics for continuous improvement to enable you to delivers a significant and identifiable return on investment.
Some key questions for small businesses:
How did prospects hear about you?
Why do customers really buy from you
Are you getting the right price for your products or service (a healthy sustainable margin)?
Do you know who your most profitable customers are who have the highest propensity to buy from you, and how to reach them?
Would you like to implement the most cost-effective ways to increase sales, profits, and achieve a sustainable differentiated competitive advantage?
If so… then do not rely on a marketing agency (digital or traditional) to tell you what to do... marketing communications are less than 15% of what real marketing is all about! Generally, marketing agencies are biased against their own service offerings! Isn’t it time you got some real expertise?
Successful marketing includes:
The identification of your most profitable customers: a prospect with a similar profile to an existing customer is eight times more likely to buy from you than a random prospect. Know who you’re selling to and what makes them want to buy from you.
The acquisition of these key customers based on channel preference (how they buy) and transactional intelligence. Bear in mind that social media does not always deliver the best return on marketing investment, especially in B2B. Try other channels such as direct marketing, telemarketing, social media advertising, organic SEO (with keyword analysis), generating leads (email data capture) using content marketing, strategic partnerships (up/cross sell with companies serving a similar audience where there is a ‘brand fit’or advertising/editorial in a relevant publication or newspaper (traditional). The key is to be present where your core customers are most likely to be interested in connecting or receiving information.
The retention of these key customers using effective initiatives to move customers along the loyalty ladder. It costs five to seven times more to acquire a new customer than keep an existing one. So, what can you do to help ensure your key customers keep coming back?
Is an over-emphasis on digital tactics or social media communications suffocating your marketing and wasting your money? If you haven't laid the foundation (marketing strategy based on a value proposition attractive to profitable segments) then you are building a house on sand, and the opportunity cost could be huge!
Remember; all big brands were small businesses once, and branding is an important part of positioning to create leverage but fails when it is not developed holistically across your marketing strategy.
Join me in the third and final part of this series where I will discuss how you can becoming a better marketer and what resources are available (many free!) to small business owners.
Kelvin Golding is a Wenta trainer and can be found on our popular intensive training course ‘Social Media and Digital Marketing’.
Register your interest now by emailing email@example.com