“Half of the money I spend on advertising is wasted; the trouble is I don’t know which half,” said John Wanamaker, one of the great marketers from the last century. At the same time, if you think that today, you're in trouble.
The ROI Game
Sadly, most quilt shops do not track their marketing efforts. But you must if you want to have a successful shop. Today, we all have access to technology to help us track our marketing quickly, easily, and cheaply. You need to measure your marketing efforts to ensure you are not wasting your time and money.
You need to be ruthless with your marketing dollars, cutting the losers and pouring into the winners. But you can only do this if you track, measure, and manage your marketing. Marketing is the bridge between you and your ideal customers. As a small business, you don’t have the time or money to build bridges to nowhere. You need to build those bridges where they will be most effective.
These marketing bridges are the media you use to spread your message. There are many types of media: TV, radio, social media, snail mail, search engine optimization, email, and others. And you need to understand the idiosyncrasies of each. And if you don’t, then hire the experts–the engineers.
You know what bridges need to be built because you have an ideal customer profile or avatar (you do have that, right?). You can still direct and oversee the work even if you're not an engineer. When building a bridge, a team of specialists, from general contractors to engineers, builds the bridge. Can you imagine what would happen if no engineers were involved in building a major bridge? My point is that what you don’t know will hurt you when it comes to the technical aspect of marketing. Become or hire the expert–they are worth their weight in gold.
But back to measuring your marketing. How do you know if your marketing is successful? Is it the number of views? Is it email open or click-through rates? Is it when you get a specific response rate? The short answer, or rather the question, is: Did the marketing campaign make me more money than it cost me? Or what was the return on your investment (ROI)? If the marketing campaign cost you more than you made (or ever will make), then it was a failure. If the marketing campaign cost you less than you made (or ever will make), then it was a success.
Now, you may argue that even failed marketing is “getting your name out there.” But that is fuzzy, and you’ll have better results if you concentrate on collecting your prospects' names over getting your name out there.
I like to think of your marketing dollars as firepower. You need to go hunting with your limited firepower and bring home enough food for you and the family. You'll scare off any potential dinner if you start randomly firing in every direction. You need to stalk, track, and target your prey to bring home enough meat for dinner. The better you get at hunting, the more effective you’re firepower will be.
As a small business, you need your firepower or your marketing dollars to get you a return on your investment. Comparing your limited marketing budget and you’re “getting-my-name-out-there” marketing efforts to the big box stores’ marketing is just like peeing in the ocean: essentially ineffective. If you wanted to make a splash, you would need an atomic bomb kind of firepower. Instead, you need a target market and trackable marketing efforts.
Example
Here’s an example. I’ll keep the numbers simple, but the principle still stands.
You mail out 250 postcards that cost $250. Out of those 250 mailed postcards, 25 people responded (10% response rate). Of those who responded, 5 ended up buying something from you (25% closure rate).
From this, we can work out one of the most important numbers–the customer acquisition cost. In this example, you acquired 5 customers that cost you $250. So, your customer acquisition cost is $50 each.
Now, if you profit an average of $40 per customer, then this would be a losing campaign. You lost $10 on each sale.
However, if you profit an average of $80 per customer, then this was a success. You made $30 on each sale.
Obviously, this was a simplified example, but it illustrates how pointless some metrics are. Your primary concern should be on ROI and the components of it: customer acquisition cost and profit per customer.
One of the advantages of marketing to a target market or niche is that your marketing becomes much cheaper. Remember, the entire goal of your marketing should be for your prospects to say, “Hey, that’s for me!” Trying to be all things to all people is a losing strategy.
ROI: Upfront vs. Repeat
In my example, we determined that it was a losing campaign if you only profited $40 per customer. But we didn’t account for another very important factor–customer lifetime value. If that customer continues to buy from us month after month, that completely changes the economics.
The money you make upfront and the money you make from repeat customers together make the customer lifetime value. Both customer acquisition cost and customer lifetime value are the key numbers you need to know to measure your marketing effectiveness. You build a high-growth quilt shop by constantly testing, measuring, and improving these numbers.
The goal of your upfront offer should be to cover or break even with your customer acquisition costs. The profit comes from keeping and building repeat customers. This approach makes marketing affordable and sustainable.
Social Media: Do’s and Don’ts
Social media is relatively new in the last 20 or so years. It is often portrayed as the “cure-all” for marketing woes. But whether you use Facebook, Instagram, Pinterest, YouTube, or any other platform, it is still subject to the same fundamental principles of marketing.
A successful marketing campaign must get three vital elements right:
Target Market - who you send your message to
Message - your message and offer
Media - the vehicles you use to send your message to your target market
Media includes radio, direct mail, telemarketing, social media, television, and so on. The time-tested fundamentals of marketing do not change just because a new type of media comes along. Each type of media has its idiosyncrasies, especially social media platforms.
First, it's not the ideal selling platform. Unless you create an event and are very clear about the purpose of the event, your posts may come off as pushy. Imagine going to a backyard barbeque, and you know you’re going to try and avoid your neighbor Sally because all she’ll want to do is talk about her next Tupperware party and get you to commit to coming. It makes everyone uncomfortable, but you can’t not invite her.
Posting too many sales posts has the same effect. Social media is meant to be social. While many platforms have helped this by designating business accounts, it can still be a little awkward if all of your posts are pushing sales. I get it; you do need to ask, but a little wining and dining is helpful.
One of the most valuable aspects of social media is being able to engage with your customers directly. You can present new ideas and gauge the overall emotions of your customers. You get the chance to show your personality and not be just another corporate stooge.
Another great aspect of social media is social proof. Being accessible, responding to criticisms and praise, and engaging with your customers makes your prospects and customers feel like they are dealing with a human rather than a faceless corporation. Social media is a great place for your customers to get to know, like, and trust you.
However, there are two potential traps.
First, social media is not free. Remember, time is money. Whether you or a team member are creating posts or responding to comments, at a very minimum, there is an opportunity cost. While these costs may not be direct dollars spent, it is only truly free if your time is worth nothing (and nobody’s time is worth nothing).
The second problem with social media is the question of ownership. Your social media page and profile are the social platform's property. So, spending huge amounts of time (and money) building up a profile and audience on these platforms ends up building up their assets rather than yours.
Your goal should be to build your own assets: websites, blogs, email lists, and so on. You can, and probably should, use social media platforms to help you in that endeavor by simply driving traffic to your marketing assets. Now you are spending time and money building something you own.
I have seen quilt shops go under, just because a social media platform changed a policy. Don’t let that be you.
With any marketing strategy, finding out where your prospects “hang out” and using the appropriate media to get your message to them is vitally important. Don’t get caught on the wrong platform, know where your prospects and customers are.
Email: Love it or Hate it, Do it
Thanks to smartphones, pretty much everybody has their email in their pocket, and pretty much everyone has an email address today (even my 90-year-old grandma). Email enables you to maintain a close relationship with your customers and prospects, allowing you to test new products and services easily. Email is a direct, personal way to engage with prospects and customers. Building and nurturing an email list will be one of your best investments.
Here are a few quick rules with it comes to email:
Don’t spam. There are strict rules when it comes to email marketing–most notably, you must have the consent of the recipient to send them marketing emails. So, never buy email lists.
Be human. Don’t write like a robot or a faceless corporation. Add your personality to your emails.
Use a commercial email marketing system. Don’t use Gmail, Outlook, or any other standard email service for mass email marketing. These email providers are not meant for mass marketing; you can get shut down. There are services out there to help you that are affordable.
Email regularly. This will really depend on your target market–regular could mean daily, weekly, or monthly. Whatever you find works best for you, do it.
Give them value. Ensure that most of your emails are not sales pitches but something that creates value for your subscribers. A good ratio is 3:1, meaning send three value-building emails for every sales email.
Automate. An email marketing platform can be one of the best salespeople in your quilt shop. They never get sick or take the day off. You can schedule emails and sequences that are sent without you.
Email marketing is a powerful tool, but only if you know your target market. It allows you to create compelling campaigns and a high degree of automation, and if done correctly, can be a valuable part of your online and offline marketing strategy.
The Power of Snail Mail
Today, “snail mail” is one of the most important and underutilized forms of marketing media. Email marketing does not replace postal mail marketing; it compliments it.
Which has more impact: the handwritten note to a spouse that says, “I love you” with a bouquet of flowers or the email or text message saying the same thing with a picture of flowers? Even the online media giant Google AdWords mails flyers.
The bottom line is that you need to include “snail mail” in your marketing strategy–from flyers to prospects to birthday cards to customers.
The Most Dangerous Number
There are many forms of media that you can use to share your message and offer with prospects and customers. But you should never put all your eggs in one basket. Your marketing strategy should use multiple media channels; never use just one. As you grow, you will add more media channels.
But how do you know which one to use? The answer is where your prospects and customers are. Stop peeing in the proverbial ocean and know where your target market “hangs out” to use your firepower effectively.
What do you do to track your marketing efforts? Email me at jacob@curtisaccountingsolutions.com.
If you need help with this and piecing together financial freedom, please schedule a call with me by clicking the link below.