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June 2007 60 Seconds of Information Impacting You and Our Fast-Forward Economy Estimated Reading Time: 60 Seconds 60 Second Articles: 1. Three Things Every Business Owner Should Know 2. Offer of one free hour of marketing consultation. 1. Three Things Every Business Owner Should Know About Marketing a) What Is Marketing? This is a question that can inspire lengthy discourse and an entire day's worth of discussion in Marketing 101 courses around the world. Many consider marketing to be the art and science of positioning your business and your product or service in the marketplace, creating a brand identity, and promoting awareness. I wish that I could get all of the academics to agree on my simple definition: "marketing is all the things a business does to create sales opportunities." It really is that simple. Some people think that marketing is limited to those initiatives that you spend money on—advertising, websites, brochures, direct mail, public relations, and signage. All of these elements fall under the umbrella of "marketing communications." While these are essential components of a complete marketing program, of much more importance are the marketing planning activities that come well before these programs are implemented. For example, some essential planning activities include: •Developing a value proposition and knowing if/how it changes by customer segment •Knowing your target audience—those customers most likely to buy your product or service •Creating a profile of your ideal customer that includes prospects' habits, demographics, personality traits, and their wants and needs •Analyzing competitive strengths and weaknesses •Selecting the right channels through which to deliver a unified message I can go on and on here, but the key point is that like anything else, when you do your homework before jumping into action, you're more likely to generate the results—and return—you're looking for. Hint: companies that try to offer something for everyone often end up selling little to few. b) What Does a New Customer Cost? Believe it or not, I come across very few businesses that track this metric, and quite frankly, it's quite important and easy to measure. You can calculate the cost of a new customer by totaling all of your marketing spending and then dividing that number by the number of new customers acquired. When you do this, you understand why many businesses fear the advertising man or marketing consultant because this number clearly shows that advertising doesn't pay. Acquiring a new customer is far more costly (estimates range from a factor of five to a factor of 10) than keeping and advancing the relationships you already have. Hint: if you're selling to customers one time only and you have not defined other revenue streams, it's much more difficult to get a positive return on your promotional investments. c) What Is a New Customer Worth? I'm not talking about how much profit you generate from the average customer each time he or she chooses to do business with you. Instead, I'm referring to the lifetime value of a customer. This metric is much more difficult to measure, or even to estimate. Why? Because it requires very good tracking of individual customers. Whether or not you are able to track specific customer visits and spending, the nugget of wisdom embedded in the notion of customer relationships is that building customer loyalty is valuable. There is a very strong correlation between long-term business success and long-term customer relationships. Successful marketing strategies nurture every stage of the customer lifecycle—from acquiring new customers to increasing loyalty to up-selling, cross-selling, and advancing relationships to increase customer lifetime value. Hint: I recently received a $25 gift card from Starbucks for being a good customer. How did they now I was a good customer? They track how often I visit and how much I spend since I put most of my purchases on a prepaid debit card. How much do you think that gift improved my loyalty to Starbucks? What did that card really cost them? Do you have a story about a merchant improving or destroying your loyalty? I'd love to hear about it. Send me a note at chrisl@intellmkt.com. To sign up a friend for our monthly marketing newsletters with tips that will help them make more intelligent marketing decisions, go to www.intellmkt.com 2. Our Summer Offer-Free Marketing Advice Would you like to chat about how marketing might improve your business? Through the summer of 2007, we are offering a free one-hour consultation about your business. It can be by phone, or in person, but we've got to make the logistics work for both of us, so you may need to get out of your office for this one. All you need to do is send me an email with what's on your mind, your preferred method of chatting, and a few times you will be available. I'll return an email to confirm. Best Wishes, Chris Lambrecht Come visit our website! |