by admin | Sep 3, 2012 | Blog
One of the most important decisions that a small business owner will make is how much money to set aside for the marketing budget.
Successful and profitable small businesses understand that they need to allocate adequate funds for marketing their business.
Prospective customers always ask, “How much should I spend on marketing?”
The answer we give them is this:
1. No matter how much you have it will never be enough! Having worked in large corporate environments our marketing consultants know that companies with $30m budgets these big brands always want more; more advertising dollars, more sponsorship dollars, more PR dollars, more salary dollars for the marketing department and the list goes on.
2. Marketing Budgets will be much higher in competitive business categories and lower in general in less competitive ones.
3. The more unique your business or product / service offering, in general, the easier it will be (and cheaper) to promote it IF you are tapping into existing demand as opposed to trying to educate the market, which will always be horrendously expensive and most small businesses just don’t have the sort of marketing budget required to do this. In these unique cases actually having new entrants / competitors may actually be a benefit as together the task of educating the market is made easier.
4. If you are the new entrant in the market, you will have to spend more to take some share away from your competitors or create new demand in the market.
Here’s a great article discussing the different criteria for setting your marketing budget http://www.imageworksstudio.com/blog/how-set-marketing-budget-your-smb/index.html and a summary for your convenience:
1. Counselors to America’s Small Business (SCORE) and the U.S. Small Business Administration (SBA) define the variable for a proper marketing budget to be between 2% and 10% of sales, noting that for B2C, retail and pharmaceuticals can exceed 20% during peak brand building years.
2. You have to spend money to make money, yet most small businesses are completely under budgeted when it comes to their marketing. Worse still when they do spend on marketing, much of the expenditure is wasted and becomes an expense instead of an investment.
3. The article goes on to provide some guidelines based on revenue quoting an average of 4-6% and making the usual disclaimer that many circumstances can warrant an increase or reduction in your marketing budget as a percentage of revenue.
4. Looking at what your competitors are spending can be useful
5. In the end your marketing budget should be properly allocated to position your organization, trump the competition, raise awareness, generate quality conversion and of course increase revenue growth and this is the most important point and exactly how a marketing budget should be considered.
6. On the subject of organic growth – Many small businesses start out and grow their clientele by word of mouth alone and are very successful. But they usually hit a brick wall. That’s where building a powerful brand is critical. When you rely on organic growth alone, you risk losing revenue from business you did not get because a % your target audience were never made aware of your product or service! And you cannot underestimate the lost sales from those prospects who perceived your current brand negatively and left your website without you ever knowing about it. This is why it is so important to build the brand correctly. Why risk millions to save thousands?
Finally I’d like to use 3 examples we can all learn from:
1. The highly successful Real Estate Agency Hocking and Stuart entered the market by investing around 20% of the Net Sales back into marketing and became one of Australia’s most successful real estate agencies.
2. Swisse feels better by increasing its marketing budget! Millions of dollars spent sponsoring sporting events and paying high-profile celebrities to spruik its products has paid off for Swisse Vitamins, which has more than doubled its profit.
a. 131 % rise in net profit to $8.9 million for the year ended June 2011.
b. Swisse revenue climbed to $77.2m, up from $45m the year before.
c. Annual marketing expenses doubled to $26m, accounting for 94% of the total cost of sales at the fast-growing company. In contrast, market leader Blackmores, which made sales of $234m last year, spent just $22m on marketing and sales activities.
So Swisse allocated approximately 34% to marketing as a % of Total Revenue whilst Blackmores allocated only about 9.5% to marketing as a % of Total Revenue.
3. LinkedIn, the world’s biggest professional-networking website, is expected to reach around $900m in sales and marketing and sales expenditure more than doubling in the last 12 months to around $76m or 8.4% of Total Revenue in a category that sees LinkedIn play in 3 different markets with varying levels of competition:
a. Professional Networking – subscription fee model where they have little or no competition other than that of consumer attention deficit caused by every other social medium
b. Advertiser Media Dollars excluding Recruitment, which is an incredibly competitive category dominated by Google’s Adwords
c. And finally competing for recruitment advertising dollars that LinkedIn is vying for by hoping to take share away from other recruitment portals.
Regardless of your industry or stage of development “You’ll Feel Better If You Budget For Adequate Marketing Investment” and invest your marketing budget wisely!
by admin | Sep 3, 2012 | Blog
“Be a Leader: How to Change People Without Giving Offense or Arousing Resentment”, part four of “How to Win Friends and Influence People” provides a path for changing attitudes and behaviour, which is after all the main objective of advertising and marketing communication.
Whether we are discussing leadership in an organisation or thought leadership in an area of professional expertise, great brands are leaders in consumer advocacy in their product or service category.
Here’s the original list compiled by Dale Carnegie:
1. Begin with praise and sincere appreciation.
2. Call attention to people’s mistakes indirectly
3. Talk about your own mistakes before criticising the other person.
4. Ask questions instead of giving direct orders.
5. Let the other person save face
6. Praise the slightest improvement and praise every improvement.
7. Give the other person a fine reputation to live up to.
8. Use encouragement. Make the fault seem easy to correct.
9. Make the other person happy about doing the thing you suggest.
One of the most powerful techniques in selling, be it in person or through communicating in any media, is asking questions and either letting the audience arrive at their own conclusion or suggesting one for them! “Tired? Stressed? You’ll Feel Better on Swisse”.
Brands that have admitted their mistakes and promised to learn from them tend to have recover quickly but those that try to defend their actions and shift the blame tend to lose trust and damage their brand reputation.
Things will go wrong in business and mistakes will happen, and today in the world of social media, where there is nowhere to hide, the strength of a brand’s relationship with its customers is about how it deals with failures.
Domino’s pizza did this in 2011. In the ads, Domino’s admitted that its pizzas were terrible, explained that it redesigned them, and asked people to give them a try.
“Viewers of these ads described them as “bold” and “refreshing,” and gave the company credit for acknowledging what everyone already knew. More important, people tried the pizza and found they liked it. The result: store sales rose and quarterly profits doubled. Domino’s took a failure point — its horrible pizzas — and made it a rallying point. The company saw negative comments as a gift from customers, an opportunity to improve the product, rather than a liability.”
Ref: HBR Blog Network: http://blogs.hbr.org/cs/2011/03/the_art_of_admitting_failure.html
by admin | Sep 3, 2012 | Blog
The Interest and Desire parts of AIDA model go hand-in-hand: As you’re building the audience interest, you also need to guide them to understand how what you’re offering can help them and the best way of doing this is by appealing to their personal needs and wants.
“Fundamental techniques in handling people”, part one of “How to Win Friends and Influence People” provides a great recipe for generating desire:
1. Don’t criticize, condemn or complain.
2. Give honest and sincere appreciation.
3. Arouse in other person an eager want.
Here in the immortal words of Dale Carnegie, is the main reason you will rarely see advertisers go into direct “comparative advertising” and tackle their competition head on.
“Criticism is futile because it puts a person on the defensive and usually makes him strive to justify himself. Criticism is dangerous, because it wounds a person’s precious pride, hurts his sense of importance, and arouses resentment.”
Carnegie goes onto quote B. F. Skinner,”… the world-famous psychologist, proved through his experiments that an animal rewarded for good behavior will learn much more rapidly and retain what it learns far more effectively than an animal punished for bad behavior. Later studies have shown that the same applies to humans. By criticizing, we do not make lasting changes and often incur resentment. The resentment that criticism engenders can demoralize employees, family members and friends, and still not correct the situation that has been condemned.”
And this is the basis of all loyalty and reward programs that have been implemented for the last 100 or so years primarily by retailers ranging from coupons to points! Simple – reward good behaviour!
Some brands don’t even realise that they inhibit their brand development by criticizing their audience behaviour without even knowing it! Can they still be incredibly successful – sure, after all the brand slogan or it’s positioning statement is not the sole success factor of a business! And I for one believe that the extremely successful Specsavers optical chain could be even more successful with a slogan that does not implicitly berate it’s target audience – “You should have gone to Specsavers”.
Being myopic and hence the ideal prospect for Specsavers, I’m ready to dispense some long-sighted brand building advice!
by admin | Sep 3, 2012 | Blog
Interest is one of the most challenging stages of the AIDA model.: You’ve captured the attention of your target audience, but you now need them to understand your message beyond the initial headline or sound bite.
Gaining the audience interest is more challenging than grabbing their attention and the message must stay focused on the needs of the audience.
“Six ways to make people like you”, part two of “How to Win Friends and Influence People” provides a great recipe for generating interest, after all it’s much easier to interest someone when they like you, your company or your message:
1. Talk in terms of the other person’s interests.
2. Make the other person feel important – and do it sincerely.
3. Be a good listener. Encourage others to talk about themselves.
4. Become genuinely interested in other people.
5. Smile
6. Remember that a person’s name is to that person the sweetest and most important sound in any language.
by admin | Sep 2, 2012 | Blog
In the last blog “What is a Brand in the Words of a Few Good Men?” we discussed why we need to go back to basics and not hide behind jargon, call a brand for what it is – a person’s or an organization’s reputation.
So how do you build and manage a reputation, in other words a powerful brand that connects with your customers and prospects by being unique and satisfying their physical and emotional needs?
Brand Building is Reputation Building
You say what you do and then do what you say. In other words, building a reputation is about effective communication and keeping your promises to earn trust.
Effective marketing communication is first and foremost about getting ATTENTION! Without it, your message will simply never have a chance. This one of the reasons headlines, regardless of the media they appear on are paramount. If the headline doesn’t grab attention then the rest of the article, story, blog, tweet, video, billboard, etc will not have a chance to communicate the rest of the message.
There are many different techniques advertisers, PR people, journalists, writers, educators and anyone in the communication business use to get attention, but in the very simplest form, “How to Win Friends and Influence people” summarises it perfectly in the section titled “Win people to your way of thinking”:
1. Dramatize your ideas. Most great advertising dramatises ideas, as do great speechwriters and script writers. Great ads for example manage to tell an emotional and engaging story in just 60 seconds.
2. Throw down a challenge. From shampoos to household appliances or overnight deliveries, a promise or a guarantee is way to challenge the status quo and grab attention!
3. Appeal to the nobler motives.
4. Begin in a friendly way.
5. Let the person feel that the idea is his or hers
6. Let the other person do a great deal of talking
7. Get the other person saying ‘yes’ immediately
8. Try honestly to see things from the other person’s point of views.
9. Be sympathetic with the other person’s ideas and desires
10. Avoid Arguments.
11. Show respect, never say “you are wrong”
12. If you are wrong, admit it quickly and emphatically.
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