Are you spending too much on marketing?

I recently wrote about the spectrum of marketing. In the article, I suggested that too many SME business owners were overly focussed on sales promotion and lead generation while there was an untapped opportunity in building their company brand. A business with little or no brand value that is focused on sales promotion is constantly having to spend money on finding new customers. This process also typically remains short term, with little longer term benefit. By growing market awareness of your business and growing trust and confidence in your ability to deliver real and sustained value, you are making it ever more likely that when a potential customer has a need it will be you they think of – and call! Also, building brand awareness means that your sales promotion becomes more effective as more people take notice. Planning and building brand value means you can start to achieve the same business growth results with less resource. However, in my experience, SMEs almost never have a marketing plan or a marketing budget. Instead, they have certain things they do; and there is always a search for new ways to find business opportunities. There are many, many marketing services companies out there offering a range of seemingly relevant approaches to finding new business opportunities. The problem is that they typically may cost a little more than you would wish while actually delivering less than you expect. The bottom line is that you spend more than you’d like and don’t quite achieve what you’d hope – you are spending too much on marketing! Yet in that treadmill, you still need to generate the business revenue so the process repeats over again.

So how do I spend less and achieve more?

In short, by thinking longer term and getting more sustained value from your marketing – build your brand! I’m not suggesting that sales promotion is wrong. Far from it. Sales promotion and lead generation are essential elements of every business. When a business is new then sales promotion is vital. Without short term revenue, running out of cash becomes a risk! My idea is that alongside your sales promotion/lead generation, include some brand value marketing in your mix. This is an investment in the future of your business. It might not have a major impact in the short term but as your company gets more widely known and your customers and markets have increasing respect of and confidence in the products and services you offer, you will find it easier to secure new business while the value of your brand and the benefit you deliver to your customers will make it easier to build and retain long-term client relationships. Lower cost of customer acquisition. Higher lifetime value. What’s not to like! ..and all at a more manageable marketing spend.

The Marketing Spectrum – from Brand to Promotion

Sales Promotion to Brand Marketing - The Marketing SpectrumAlthough closely related, there are clear and recognised differences between Selling and Marketing. What is considered less often is the Marketing Spectrum. At one end is sales promotion, where the marketing goal is generating leads. Typically this is a short-term process. At the other end of the spectrum is brand marketing – a longer-term process – where the goal is building awareness, perception and understanding of the value your company delivers. Achieving this goal helps to ensure that when people in your market think of the products/services you supply, they think of you as a good place to buy. In larger (i.e. non-SME) companies, much of their marketing effort focuses on:

  • Press Relations
  • Brand Awareness
  • Market Engagement
  • Market Perceptions

This marketing activity isn’t so much about generating leads as managing how the company is perceived by their customers and markets. i.e. building the Brand. They know that a strong brand adds real value to their business.

The value of a brand

According to US business publishing giant Forbes, the most valuable brands in 2016 were:

  1. Apple. Brand value: $154.1 billion.
  2. Google(Alphabet). Brand value: $82.5 billion.
  3. Microsoft. Brand value: $75.2 billion.
  4. Coca-Cola. Brand value: $58.5 billion.

Clearly, building a brand is a great way of adding real value to a business! The fundamental value in these businesses is their brand. Think about it, if any big brand launches a new product or service, they get noticed, and they try to be very careful that their new offering reinforces their brand – though if you remember Dasani Water launched by Coca Coca-Cola in 1999, even the big boys don’t always get it right first time! You can read the article here This said, despite the initial problems, the power of the Coca-Cola brand marketing machine didn’t let them down! In the year to May 2016, Dasani held a US market share of 9.9% worth some $1Billion in sales (Source) But is Brand Marketing relevant to the SME sector?

So what has this got to do with me?

Every business – even your’s – has a brand, and your brand has a real and sustainable value; yet for the majority of SME businesses, when owners and managers think of marketing, their primary focus is on sales promotion, generating leads. Leads can deliver short-term revenue but it is a growing brand that delivers sustained business value. When a business focuses on sales promotion, if a particular activity doesn’t deliver on expectations then the ‘marketing’ stops. There can then be a period of little or no market communication and engagement while the next lead generation plan is put together. Don’t get me wrong, lead generation is important for sales and revenue but sales promotion isn’t really building the business brand which is what grows the business value.

SME brand building

By building your own brand you grow real substance in your business – a platform which can deliver value, performance and impact to your sales promotion.

A well-structured marketing process should encompass brand building as well as lead generation

Amongst SMEs, brand building is too often ignored. I think a key reason for this is cost perception. Brand marketing can be seen as an expensive luxury because it doesn’t drive perceptible short-term sales which are the focus of many SME businesses.   However, building your brand in the shorter term can have a real impact on your sales promotion in the medium and longer term.

The more people know and trust your business, the more notice they will take of your promotional efforts.

Although it is true that 20 years ago, brand marketing needed deep pockets, it is absolutely not the case today; yet there is still an issue – there is a quandary in SME marketing.

The lure of Sales Promotion

Because many SME businesses equate marketing with sales promotion there is a plethora of companies that have grown up offering marketing (sales promotion) services to meet this demand. These services can look appealing so the bias continues – even though, in practice, the services offered (and paid for!) don’t always quite meet the expectations of the SME => Time to go and look for another source of leads!

 There is an untapped opportunity for SME businesses...

I guess the lead generation dilemma will continue but there is still an untapped opportunity for SME businesses to benefit from exploring the wider marketing spectrum and consider brand marketing. As I mentioned above, as well as building business value, effective brand marketing will also have a positive impact on sales promotion – it is win-win.

How do I bring brand marketing into my business?

Here are my top 5 tips for making brand marketing a core element of your business development strategy:

  1. Create a written plan defining:
    • Your key business proposition
    • Your target market
    • Why your proposition delivers real value benefit to your customers
  2. Use the above to develop a practical communications strategy and action plan to get your message out to your market
  3. Regularly review and refine your plan
  4. Stick at it Brand building takes time. You should see it as a consistent function of your ongoing business, something that you keep doing all the time.
  5. Don’t spend too much! This may sound like an odd thing to say but if you over-commit your resources (could be time, or money, or both) you will struggle to stick at it and sustained activity is essential. As a guide, I suggest limiting your ongoing brand marketing budget to no more than 0.5% -1% of your business turnover.

There is absolutely nothing to stop you developing and running your own brand marketing. There are lots of free tools online to help you. If, however, you would appreciate some support to get you going or keep you going please get in touch.

Marketing – Cost or Investment?

Peter Drucker, one of the fathers of Business Consulting, is quoted as saying:

“Because the purpose of business is to create a customer, the business enterprise has two–and only two–basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.”

Thus, Mr Drucker is saying that marketing, rather than being a cost, should be seen as a core tool for building a business. As such it should be considered an investment.

So why in so many businesses is it simply seen as a cost of sales? 

The answer lies, I believe, in recognising that marketing covers a spectrum of business communication at one end of which lies sales promotion – yet it is sales promotion where many SMEs focus!

At its heart, marketing is about adding value to a business. OK, this value is normally demonstrated through profitable sales. However, generating short-term sales should not be the sole focus of marketing. Rather the focus should be creating an environment that makes those sales easier to secure (and more profitable!).

So, if we accept that marketing is an investment and that it should be measured as such, taking a long-term view, we have an issue: the way SME businesses are encouraged to measure marketing.

Search Marketing -The Issue Exemplified

If you ask any SME business owner what his/her marketing strategy is, invariably ‘search marketing’ will be in the mix. Usually as a combination of SEO and paid advertising analysed and measured using Google Analytics or similar.

Analytics encourages Goal Setting, measurements of conversion rates against these goals and the analysis of the “conversion funnel”. Whilst this process is a vital part of the picture, these are all measurements of sales promotion activity, not marketing,

For example

You spend £100 in a month on Google advertising, or on technical SEO activities. This delivers 10 orders worth a total of £700. That £100 is simply a cost of sales. Stop spending the £100 and the orders will dry up.

So where does marketing come iN?

Marketing is a set of long-term activities. Over time these make people more likely to search for your brand rather than a generic product, or to spend more on your product rather than looking first and foremost at the price in comparison to the competition. Its success is measured via the long-term trends – order values, conversion rates, repeat order rates all going up, customer acquisition costs coming down. In other words, marketing is the activity that creates a favourable environment for your sales promotion activities. Increasing their effectiveness, reducing their cost, and extending their longevity. In reality, to be successful, a business needs both the full spectrum from sales promotion to Brand Marketing. Focusing on only sales promotion misses some major long-term opportunities.

Build your brand and play the long game.

I was watching Dragon’s Den yesterday. Two of the pitches got me to thinking about what it is to be in business and how you build your brand to promote what you do. The two pitches were very different. One won the Dragons’ approval, the other didn’t: Pitch 1 The pitcher had an events business, he had a good idea, and was generating turnover. To grow his business, he was successfully using Pay-per-click to generate leads that were converting into business. On the face of it, he was having success. However, when the Dragons dug into his business they identified that the “Sales promotion” he was undertaking was generating turnover but it was not building a profitable and sustainable business. The conclusion they came to was that whilst his business might be delivering an income for him, the lack of long terms planning or development of a brand meant it was not an investable business. Everything was simply too short-term. Pitch 2 A classic tech start-up. Their pitch was focussed on building the brand and awareness of what their product would do, rather than directly generating leads to sell their product. In essence, they were looking to build a business that had long-term value. The expectation that value would ultimately come from the sale of their products was almost a given. If the market trusted their company and products and had confidence they would deliver value, the market would buy. The priority was building long-term value rather than short-term sales. Not surprisingly, it was pitch 2 that won the favour of the Dragons and lead to investment offers. Interestingly, I am sure that pitch 2 also generated sales. In fact, I know it did because I went online and bought one! Hopefully, my story goes to illustrate a point…. Since the 1980’s I have worked in marketing in both the corporate and SME world, through the birth and growth of the digital marketing age. In my experience:

Corporates (successful ones at least) focus on building long-term value whilst SMEs tend to focus on generating leads and short-term business development.

This isn’t too surprising as traditionally, building long-term value has been an expensive process beyond the resources of smaller companies, whilst through taking the short-term approach most SMEs are able to build a moderately successful and profitable business (up to a point!). However, I suggest that to see real success and growth, companies need to look longer term and think more about building value rather than short-term sales. This is where the real potential of digital marketing lies for SMEs. Look at how digital marketing is sold; it’s all about the short term:

  • Search Engine Optimisation
  • Google/Social Media Advertising
  • Website Conversion Optimisation
  • Optimisation of the sales funnel

These are all pitched as “magic wands”. They are relatively easy to sell as they seem to offer highly measurable, short-term benefits. However, in my experience, they too often disappoint! Now don’t get me wrong, these tools are all potentially vital elements of successful marketing programmes, but my suggestion is that by focusing on them as the ultimate goal you are focusing on the wrong thing. Let’s face it, successful companies have one thing in common; they have a strong brand and their marketing is focused on maintaining value through developing that brand. By telling their story in a way that is relevant and attractive to their target market, people buy from them and (assuming their business model is sound and they actually deliver) sales, profitability and growth tend to follow. Within this context, the elements described above become tools in the process of building a brand in a planned and measured way. But the ultimate goal is the development of the brand, not the optimisation of individual metrics. “That’s great in the resource rich corporate world” I hear you say, “But how does it relate to me?” Through digital marketing, every micro and SME business now has the potential to build their own brand and to reap the associated successes that used to be only accessible to large, rich corporations. However, if a business focuses on the short, rather than long-term value, they are missing out on this opportunity. Let’s look at the process of building long-term value. I would argue it is a simple 4 step process:

  1. Understand what your business is about, and the value that you offer
  2. Understand your market and how they will perceive this value
  3. Use this to build your brand Story
  4. Engage with your market to tell your story using the tools offered by the digital age

Ok, this might be like saying becoming a millionaire is easy 2 step process:

  1. Invent something that earns you £10 per unit, and that no one else has thought of
  2. Persuade 100,000 people to buy one each

In reality, it’s easy to say, but slightly more difficult to bring to reality! But unlike becoming an instant millionaire, developing a long-term value through a strong brand is well within the capacity of most business owners, and ultimately may deliver the million! However, it does require a significant shift in mindset and the willingness and resources to commit to investing (and yes it is an investment) in marketing. However, the digital marketing tools now available mean that investment need not be substantial, is not always purely financial, and in my experience is well within the reach of most micro and SME businesses. As a business, BSA Marketing specialises in supporting businesses through this process and help them to build their brand through the use of digital marketing. Furthermore, we have access to financial support for SME businesses who would like to explore the process of brand building as a route to profitable growth.

In Conclusion

I would like to finish on a real world illustration: About 6 weeks ago. a client asked for my input on the question of targeting “Google featured snippets”, where Google will highlight result from a website – A classic digital marketing “Magic Wand”. My response was rather than focus on the short-term goal of “Winning” a featured snippet, focus on the longer term objective of delivering valuable content that answers the questions people are asking, and in a format that makes it easy for Google to deliver. Building your brand rather than chasing leads can deliver sustainable success I am happy to say our Client followed my advice and on Friday I received an email saying that, as a result, Google was now using some of their content as a “Featured snippet” delivering valuable visits to their website. Despite not re-routing resources to “chase” the short term goal of appearing as a featured snippet, choosing instead to maintain focus on delivering great, valuable content for their market, they achieved their short-term goal as well. Win:Win! If this has inspired you to rethink you marketing and you’d like to explore the possibilities for your business, we would love to talk to you.

The importance of the USP

After the events of 2016, there is no question that we enter 2017 with a degree of economic (and political) uncertainty. Many people are trying to forecast how this unpredictability may affect their business during the year. The short answer: We don’t know!

Be Unique

In my view, there is little point in getting embroiled in things over which you have no control. It can be both frustrating and distracting. Much better is to concentrate on the elements where you do have influence. These may be less globally significant and more parochial but they can still make a big impact for you! In business, this means one thing above all else. Have a strong and unique selling proposition – USP. Whatever your business does, make sure you deliver real value to your customers and make sure you do it better than anyone else.

Clear Strategy

You are best positioned to survive and thrive in uncertain economic times if you have a clear, well- researched business strategy as a platform to communicate your USP effectively to your marketplace! So what should you do in light of this? Ask yourself 3 questions?

  1. Do I know why my customers buy from me
  2. Do I know what makes my offering stand out from my competitors
  3. At a party, If someone asked you “what do you do?” would your answer keep their interest?

If your answer to any of these was no, then maybe you should take some time out to think about your offering and how to differentiate this in the market. If you can answer yes to all these then the next thing to think about is how to communicate this to your marketplace. Now ask yourself 3 more questions

  1. Do I know who my customers are and do I have the relevant information to communicate with them?
  2. Can I define my wider marketplace?
  3. Do I have an effective and measurable mechanism to communicate with these individuals?

If you can’t answer yes all of these, then you need to take some time out to consider your marketing communications process. BSA delivers Real Marketing, clear and relevant planning alongside sustainable implementation. We help you set your plans and make them happen. Call me for a chat