First Steps to Developing a Marketing Plan
Direct Mail . . . Newspaper . . . Radio . . . Online. There are countless places to spend each advertising dollar. The hard part is determining the most effective medium for your business. It is not a matter of "One Size Fits All." The response rate for each media type will vary depending on the product or service you offer, your target market, and the characteristics of the community that you are marketing in. Even in the same industry, what works in one place may not work in another.
There are three basic steps to take to develop a marketing plan that works for your business:
# Have a system for tracking the source of customers and clients.
# Know the marginal cost of each of your products and services.
# Identify your target levels and strategy for each customer segment.
Know Where Your Business is Coming From
Before you can determine the effectiveness of any type of advertising, you need a system for tracking how your customers and clients find you.
The list below ranks customer sources and the likelihood that a potential customer will purchase from you versus one of your competitors.
# Current satisfied Customer
# Referral from a trusted source
# Current relationship, but have not yet purchased
# Recognized expert in field
# Ads
# Cold Calls
The higher the level of trust developed, the higher the probability that they will purchase from you.
I would suggest defining your customer tracking system based on these terms. Your system can be as simple as keeping a running tally on a sheet of paper for each sale or new customer for each category. An Excel spreadsheet is another excellent and simple way to track this. If you have an existing customer database, point-of-sale program, or accounting system, add a field for each record to track this.
Here's the trick. You have to ask your customers and clients how they heard about you and you need to be consistent. After they give you the first answer, ask them if they heard about your business from any other source.
After you start tracking this, you will get a much better idea of what avenues of advertising are working for you. When at all possible, you also want to track the lag time between the day the marketing piece is distributed to the time of purchase.
Know Your Gross Margin
Let's say that you have been tracking where your customers are coming from and there is one area of advertising that hasn't been getting great results but pays for itself. Should you keep it?
Maybe not. No matter what type of business that you are in, there is a cost of doing business. There is a certain percentage of every dollar in revenue that goes to cover your overhead costs.
In order for advertising to truly "pay for itself," it must cover its own cost plus the marginal cost of doing business. But the point of advertising is to make your business money, not just pay for itself. If it is truly "break-even," maybe it is time to look at other options.
Targeting Trust in Your Marketing Plan
When I sold real estate, the general rule of thumb for someone starting in the business was that you work really hard for three years and then it starts getting easier. At that point, referrals and repeat customers become an increasingly larger part of your business.
I think this principle is true regardless of the industry, and it goes back to the level of trust between you and your customer as illustrated in the list above. If the purchase decision involves a low dollar amount, it will require a lower amount of trust and a shorter amount of time to develop.
So back to the original question, where do you put your money? If you want a truly effective marketing campaign, a plan for each customer source in the trust diagram should be developed.
Copyright 2005 - Carla Alvarez, Legacy Marketing Services
Carla Alvarez is owner of Legacy Marketing Services which provides integrated marketing services for businesses including business identity, web and CSS development, and business development seminars.
