Land Local Customers Small Biz Marketing
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The document summarizes a presentation for small businesses on marketing strategies. It includes polls to gauge the audience, discussions of marketing philosophies and best practices like assessing customer needs and asking for referrals. Specific tactics covered include email marketing, social media, advertising and direct marketing techniques such as mail personalization and creating a sense of urgency. Case studies looked at a nonprofit's and startup's marketing challenges and how testing can help optimize efforts.
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Land Local Customers Small Biz Marketing
- 1. July 7, 2011 www.zerodivide.org @zerodivideorg facebook.com/ZeroDivideorg Landing Local Customers: Small Business Marketing on a Shoe String
- 11. Sales Steps for Success!!!
- 18. Where Is Money Being Spent Today? Source: Mashable, June 2011
- 19. What Is Working Online?
- 25. Direct Mail vs. Email Breakeven Analysis Direct Mail Email Cost: $0.35-$1.00 each $0.01-$0.10 each Net conversion rate: 0.01%-0.50% 0.10%-2.0% $2-$1,000 $18-$1,000 Cost-per-sale: Customer Value: $25? $1,500? $750? $100?
- 28. RFM Model – An example segmentation frequency recency 5x 4x 3x 2x 1x <1 mos 5 5 20 45 100 175 2-6 mos 5 15 50 75 500 645 7-12 mos 10 25 75 70 400 580 12-24 mos 20 40 125 140 1000 1325 25+ mos 50 100 250 300 2000 2700 90 185 520 630 4000 5,325
Editor's Notes
- Sales principles and tips A comparison of marketing channels (pricing and cost effectiveness) Marketing best practices for small businesses All of the above
- Go-to-Market: a. b. Storm the campus: Investment teams, campus clubs, student events; we go after the leaders on campus to spread the word.
- Direct can probably be boiled down to three key aspects. The direct response nature of the medium. We’ll talk about that in detail shortly. Database analysis is another key aspect and I’ll provide a simple example of how to develop a basic “response model”. And finally Direct is essentially a mode of thinking, an approach, a way of thinking about marketing problems. And we’ll talk about that a little.
- Perhaps simples way to explain Direct is to compare it to traditional marketing. In traditional marketing, you have manufacturers who make products and retailers/distributors who sell the product. So in traditional marketing the manufacturer has a “middle man” between the maker and the customer. Advertising is often used by makers to increase demand for their products at these retailers. In Direct, in contrast, there is no middle man and there is no store. The maker goes direct to the customer. Earliest example of this is LL Bean, a boot maker, who are still in business today. They created a catalog which was mailed to a list of licensed fisherman in order to sell boots and other fishing/camping supplies and equipment. Sears is another early example of direct marketer. In Sears case they sold products by others, sewing machines, cooking utensils, toilets, even automobiles, but they did so almost exclusively thru their mail order catalog. Nowadays, many makers sell directly to the customer. And the channels have expanded to phone, Web/email even directly on TV.
- But let’s talk specifically about direct mail. But keep in mind these key techniques are applicable, really, to most Direct marketing medium. Make sure sure your offer is clear and obvious. What are you selling? You’d be surprised how often the offer is not clear. You must have a strong “call-to-action”. What do you want them to do? Spell it out: “Call 800-123 to order your free e-book”. Consider including a special incentive to get folks to order. This can be a free month’s service, a book. At one company I worked for selling phone service, the incentive was six months of free ice cream. Definitely create urgency. If you give someone a bunch of time to decide, they’ll put off the decision. Why buy today when you can buy tomorrow. So always put an expiration date: offer expires July 30 th . You can tie to incentive to the offer period. Order today and get a free ipod.
- Direct marketing communications should definitely be personalized. Address the letter dear Ed or Dear Ed Gallagher rather than dear Valued Customer. Try to keep it relevant. If it’s addressed to physicians include some relevant medical references or their speciality or the name of their hospital or association. This is where the richness of your database really comes into play. Another key technique is a Johnson Box. This is a box at the top of the letter usually on the right side, above the salutation where you highlight the offer and the call-to-action. Make it stand out by putting a red-lined box around it or some shading. If they have time to read nothing else make sure they read this. In letters the PS is also a critical hot spot. Oftentimes people scan the letter and the first thing they actually read is the PS. So take advantage of it. Put your offer and your call-to-action there.
- Quickly, a few more points…. Think in stages. Focus only on getting folks to the very next thing they need to do. With direct mail, the first thing you need them to do is to open the envelope. Make sure your envelope is something they’d want to open. Consider putting your incentive as a “teaser” on the outside of the envelope. Definitely consider some “hot” colors like red, orange, yellow…these colors draw the eye. Don’t over use but use them strategically to make your offer and call-to-action really pop. Magic words: Next to one’s own name (see personalization above), “free” is the sweetest sounding word in the English language. “Guaranteed” runs a close second. Wherever possible include these words in your letters. I’m often asked how long of a letter is too long. Isn’t shorter better? One of the most successful letters of all time was 5-6 page solicitation for a subscription for the Wall St Journal. If you’ve got a great story tell, take as much time as you need. But stay on point of course. Email – Shorter is better…focus on “above the fold”…”preview pane”….
- But does direct mail make sense for me? How about email? Well, that depends on a number of factors. Let’s walk through a break-even analysis. Direct mail is generally more expense but it also generally has a much higher response rate. Email is cheap but you get what you pay for. You need to think about both opportunities in terms of cost-per-sale. And keep in mind that as you ramp up marketing, as you learn, that you’ll get better at this. Your costs will come down over time, sometimes dramatically and your response rates will generally improve, especially initially where the the learning curve is steep. But in the end, it comes down to this: What is the value of a new customer? Not just for a single sale, but over his/her lifetime of expected repeat purchases. That will determine how much you can spend to acquire him.
- Database marketing is a killer part of Direct. Much of what we can do is tied back to the database. It’s literally a gold mine. You need to nourish it. Why? Because existing customers are the single best source of new sales. Both from themselves directly via repeat sales, but also in the form of referrals for new customers. This aspect is too often overlooked.
- Database marketing sounds good. But it sounds complicated. How do I do it? A really simple model for targeting customer is the RFM model. You have a large database of customers. But you can’t afford to mail them all. And you shouldn’t. You want to mail only those customer who are most likely to respond. How do you know who are most likely to buy again. RFM can help. It’s a cross-tab that ranks the probability based on how recently and how frequently they’ve bought from you. Then you layer in the total amount of their purchases. For obvious reasons, you need money to buy stuff, the more money you have the easier it is to part with it. The best predictor of how much money someone has is how much they’ve spent with you so far. Let’s see how it works.
- Here’s a cross-tab of about 5,000 customers. But you can only afford to mail 500. So which do you use choose? On the top is frequency. In the far left column you have 90 customer who’ve purchased from you 5x or more. On the vertical axis you have recency. So if you look across the top you see there are 175 customer who have purchased in the last month. But in the upper left corner you see there are only 5 customers who have purchased 5x or more AND in the last month. These would be your top candidates. The shading goes from dark to light indicating the higher probability. Once you have a list of all these 500 or so customers you can sort them further based on how much money they’ve spent with you total. The more the better obviously. So this is a pretty simple but effective response model.. And you can see it doesn’t require an advanced degree in statistics.
- Finally, as should now be obvious, Direct is really a state of mind, it’s a way of thinking about things analytically. We don’t believe in “warm fuzzies” and “gut feelings” about what will work. We take a scientific approach and we test everything. Just like a scientist, your goal should be to learn about your customers and your marketing. Is Letter A better than Letter B. You have to test it to know for sure. So having different marketing codes on these two letters is a great way to know which letter was the source of specific sales. Every marketing should have a control population. Because you’ll get some sales without doing anything. Walk-ins, referrals. The big mistake is attributing sales to a campaign that doesn’t really deserve it. So when you do that mailing of 500 names, you should actually select 600 names, and randomly take 100 names and not mail them at all. You may be a few sales from among those customer without actually mailing them. So the effectiveness of the campaign is the sales from the campaign minus what you got with no effort. Unique phone numbers is another way to easily track sales. Google Voice is great for this.