Never stop thinking about marketing--it's the best way to grow your business.
By Elizabeth Wilson | June 16, 2009
Entrepreneur.com expert columnist and marketing guru Mark Stevens addresses the most common marketing questions and fears new business owners and would-be entrepreneurs face as they start up in a sluggish market. The solutions he offers are both time-tested and cutting-edge--ensuring you'll land at the top by the time this sour economy turns sweeter. Learn how to measure your ROI, when and how to devise new marketing strategies to replace ones that don't work and how to gain more market share over your competitors.
Entrepreneur.com: What is marketing?
Mark Stevens: Marketing is the most misunderstood work in business; ask 100 people what marketing is, and you'll get 100 different answers. You get back: advertising, websites, good service, etc. It's all of those things, but the essence of marketing is that it's the movement of the business from one level of profitable revenue to the next. Marketing has to be a driver of business growth, so if you're doing a million in revenue one year, the next year you need to be doing a million and a half, and then you take it to 2 million and so on. You can't stay where you are. You need a catalyst for growth. Accounting can't drive growth, HR can't drive growth, organizational structure can't drive growth--these are all important structures, but marketing is the engine for growth. The only valid definition of marketing is the ability to take a company from one level of profitable revenue and continue to do that.
What's the most common misperception people have about marketing? What happens often is that people over the years have confused marketing with creativity. We'll have people come in typically right out of school and apply for a job and we'll say, "Why do you want to go into marketing?" And they'll say, "Because I'm a creative person." They say, "I like art" or "I like this and that." Well, you really have to like business; what's happened over the years is that marketing has begun to focus on creativity, on aesthetics, on making beautiful commercials and ads or websites. These things have a place, but much more important is the development of a strategy that can effectively make the business two things--scalable and sustainable.
What are your tips for creating a successful business plan? Most small-business owners really start off with the desire that they will grow something of substance; they just don't know how. It is the self-reliant kind of person who starts a business, so sometimes she takes that self reliance to extremes and doesn't delegate anything to anyone. Then she is held hostage by her own limited situation.
Very few, maybe 1 percent, really truly want to stay a small business: "I don't want any employees, I don't want any hassles, I don't want anybody to manage." That's not a small-business owner though, that's a self-employed person. If you want a business, then you do have to learn how to manage and know how to manage five, 10 or more employees. And then you should want to grow it. Because if you believe in the value of growing, and you believe that your products are really superb and are better than anybody else's, you should want to grow your business and have people enjoy them far away. It's not really difficult to manage people--you have to understand leadership. It's not a popularity contest, and you're going to sometimes make decisions that people will be unhappy with. If you are open to ideas from employees and listen to them and then make a decision, that's all you have to do.
A useful equation that I built when I started MSCO that applies to every business is "C" plus "A" plus "M" equals PG.
C=Capture Attrition happens, so you must continuously capture clients or customers.
Solution: Capture through your website, internet marketing, events, etc.
A=Amplify Once you have a relationship with a customer or client, you need to grow it. You need to cross-sell them, up-sell them, enhance the relationship and get referrals. Oftentimes businesses, once they turn a prospect into a customer or client, lose the sort of lust they had when they pursued that person as a client.
Solution: Give them the same level of wonderful support you did in the beginning. Ensure that your customers know the full range of products or services offered.
M=Maintain You maintain customers not by giving them loyalty points but by providing exceptional products and level of service.
Solution: Do things they don't expect. For example, I was at home recuperating when a salesperson at my favorite store drove out and brought me a royal blue sweater (my favorite color) from a designer I liked. You can't leave a business that does those kinds of things for you.
PG=Perpetual Growth If you do all three things, you will have perpetual growth. The problem is businesses tend to stop doing one, two or even three of those things. How many businesses actually do these types of things? Not very many, which is good news for your business.
What is the best way to grow a business using marketing? You need to contact your existing client base. It's almost free--you just send e-mails making them aware of the fact that "By the way, we have these 10 products you may not know about, and because you're a good customer, if you purchase one of your regular items, we'll give you a sample of one of the other products for free." Instead of doing those things, many businesses simply advertise. There's nothing wrong with advertising--we recommend it to our clients and we do it ourselves--but you can't simply just advertise; you have to have a strategy that's wrapped around those three elements.
You need to measure your ROI. If you spend $1,000 on marketing, you need to get back at the very minimum $1,001. A lot of people come to me and say "I tried direct mail, I tried Yellow pages, I tried this and that and it didn't work." Well, they didn't really measure and they don't really know--they don't test things. The ability to measure ROI is critical to the effectiveness of any marketing campaign. The reason I wrote Your Marketing Sucks was because I felt like the way marketing has been done takes money from small-business owners and puts it in the garbage--there's no strategy and they're not testing it to get a strategy that does work.
How do you do research to determine what kind of campaign is going to work? Let's say you do an advertising campaign. The best thing to do is make sure there's a prominent way for people who see or hear your ad to get in touch with the company. You need a phone number and a url. Sometimes you may want to create a special url so you can make sure you know where people are responding. For example, go to YourMarketingSucks.com. There's a page where you can set up an appointment by phone. We set that up for a particular campaign we're having as a way to know where people are coming from. They do it, we measure it and see how many people made appointments. But that's not good enough, either--you need to determine how many appointments were converted into clients. That particular campaign cost about $10,000. So the only way it is successful is if we get back at least $10,001 in revenue.
So what if you don't; Do you scrap that campaign? You might want to change the message to another message, and if it doesn't work, then you can also try another medium. But in that campaign, for example, in the first week it was a radio ad, which cost $10,800. We generated more than $200,000 in business. That was pretty good ROI. Two weeks after that we did an $8,000 TV campaign for two weeks and only got two people responding, so radio worked better. But the client who responded to the TV campaign has already paid $75,000. So we did learn that radio is more effective for the number of respondents, but maybe the responders for TV will be bigger fee payers--we're not sure yet. Perhaps a better commercial will give an even higher ROI, or maybe I'll be sorry. Regardless, you have to use one as the model and then keep testing against it.
How much time should a new business owner spend on marketing? He or she should never stop thinking about marketing. The person who owns the business should always think of himself or herself as the marketer-in-chief. It should be the most important thing he or she does because it's the growth of the business; the business owner shouldn't just hand it off to other people or another firm. Someone else can do it, but the person who owns the business should always be involved.
Many new business owners are experts in their services or products but aren't well versed in marketing strategies. What would you suggest they do? They have to recognize that while they're the expert in the operations of the business--how the factory works or the retail store works--those aspects don't grow the business. You have to become a marketer. The reason small businesses fail is because they stop thinking about marketing. It's also why big businesses fail. It's why General Motors is failing now, because the senior management of General Motors stopped thinking about hybrids and creating cutting-edge cars. They just stopped doing it, whereas Toyota never stopped thinking about marketing and making products more and more appealing. A lot of small-business owners start businesses in areas of their expertise--they're IT specialists, computer fixers or chefs, for example. It's important to maintain skills as a chef, but you have got to think, how am I going to market my restaurant? Otherwise you'll be cooking for yourself.
Can you talk about why right now is a good time to increase marketing efforts?
Right now your competitors are sleeping; they're hiding in the bunker, they're waiting for the dust to clear. And they're leaving you a golden opportunity to grow your market share. So develop a strategy, think it through--remembering it can't be perfect from the start. Get the courage to make an investment and then test, test, test until you break the code.
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