Marketing and advertising costs are often the first to go in a difficult economy. Fewer customers, fewer buyers mean fewer dollars coming in and the obvious choice is to cut expenses. Isn’t it interesting that marketing and advertising costs are the first to go for many a small business. Perhaps it’s because business owners think they bring minimal results and so no big deal.
Without marketing or advertising your revenues will continue to fall. With no effort to bring in more customers, especially when there are fewer customers to be had, the more quickly your small business will crash and burn. Maybe the thought is that the economy will rebound shortly and the customers will be beating your door down again. My advice – don’t hold your breath.
In a down economy the one thing you can’t eliminate is marketing. However, it is a great time to revisit what you are doing for marketing. Remember the 80/20 principle I discussed last week? Likely 80 percent of your marketing time and dollars are only producing 20 percent of your results. There is the waste to cut.
On the other hand, 20 percent of your marketing time and dollars may be producing 80 percent of your results. Here is the catch, do you know which 20 percent? Maybe you do, intuitively, but for most of us the only way to know is to test the results.
You should never spend even $1 unless you can know what the results will be or can at least test the results. What is the point of spending $10,000 on a website, advertisement, flyer, or other marketing effort unless you know that you will get more than $10,000 back in new profits? Don’t throw your money away.
I have talked to many business owners who have spent thousands of dollars on their websites and never gotten a customer from it. I have talked to many business owners who have spent thousands of dollars on newspaper advertising, brochures and flyers and couldn’t tell me whether they got enough new customers or profits to justify the expense.
Make the assumption that Pareto is right and the majority of your efforts are producing only minimal results. Then analyze and test those marketing efforts to find the small number that are the real winners and further capitalize on those while cutting back or eliminating the others.
The benefit? You’ll cut costs and increase revenues. Can’t think of a better combination, can you?
by Steven Schlagel