How Much Should We Spend On Marketing? Pt.3

Part 3 in a Series of 5 – More On The Math of Marketing

Now that we know we need 200 new projects, let’s find out how many leads we need to close 200 new projects. First, understand that you have suspects and prospects. Suspects are people who have an interest in your products or services. They may or may not be aware of your company.

If you typically sell to CFOs at companies between $10 million and $50 million in revenue, it’s reasonable to say you have 500 suspects in your local market. Since you have no idea whether they are interested in working with you or not, they aren’t qualified. You might even have someone call your company to request information on your products or services, but until they are qualified, they are still a suspect.

Prospects are qualified and the better you qualify them, the more effective your sales efforts. Qualified means you or your sales people have had at least one conversation with Power (the person who signs the check), discussed their Pain (or major issues they are facing that your company satisfies) and also addressed FIT (how your company uniquely satisfies issues like this every day).

If you have 10,000 suspects in your marketplace, typically you will only end up qualifying around 10% these suspects into prospects. This means you now have around 1,000 prospects. What is your close ratio? How many prospects do you typically convert into customers? This could be 10% or 50% depending on the strength of your team. If we use a conservative estimate of 20%, that gives us the 200 new projects we need to generate $1 million in new revenue.

So far, so good. Now, how do we get 1,000 new prospects? Don’t worry…we are on it.

Square 2 Marketing—helping business owners.

How Much Should We Spend On Marketing? Pt.2

Part 2 in a Series of 5 – What Is The Math of Marketing?

So, now we know our overall business goals. The next step is deciding how marketing will play a role in achieving those objectives. This will help develop a budget and then compare that budget to industry norms for marketing investment. You see, it’s not really about what everyone else is doing or not doing. It should be about doing what’s right for your business.

For the sake of the blog, let’s assume we want to aggressively grow our revenue 10% to 20% in 2007. That is going to take an investment in marketing, but not necessarily the kind of investment you might think.

Since all sound marketing programs come complete with quantifiable metrics, its easy to predict revenue from marketing programs. Let’s do some of the math required to set our marketing budget.

Our example company does $5,000,000 in revenue. We want to improve revenue to $6,000,000 this year. So we need $1,000,000 from new customers or new projects from current customers. That means we need a plan to generate this type of activity.

A new customer is worth $3,000 and current customers usually generate about $2,000 from new projects. This means we need 200 new projects during 2007. Keep that number in mind. It’s important.

In the next part of the series, I will show you how to get 200 new projects and what is required to invest in marketing to generate the 200 new projects. Remember, if you only close 10% of your opportunities, it's not 200 leads we need, but 2,000.

More tomorrow.

Square 2 Marketing—helping business owners.

How Much Should We Spend On Marketing?

Part 1 in a Series of 5 – Defining Business Goals

Of all the questions we answer, this one is by far the most common. How much should we spend on marketing? To help demystify the question, I will spend the entire week on a four part blog series to help break down the issues and hopefully help our readers better understand how much to invest in marketing.

First, marketing must be considered an investment, with measurable returns. So when you are considering how much to invest in marketing, you have to qualify the question before I can answer it. Here are a couple of questions you must answer before you can set a budget for marketing investment.

1. What are your overall corporate goals? To grow the company top line 10%? To reduce expenses by 5%? To maintain current revenue, if your company is in a downward trend? To grow 5% or grow 25%? These questions impact how much to invest in marketing.
2. Where will new revenue come from? New customers? Current customers? Do we have a strong sales effort?
3. What is the competitive environment? Are there many competitors? New competitors? No competition?

There are other questions, of course, but let’s start with these. Your answers will help decide the level of investment. For example, a company looking to aggressively grow in a competitive environment should plan on investing more in marketing.

A company planning to maintain current levels of revenue, reduce costs to improve profitability, and not facing tough competition may be able to invest less in marketing.

Ask yourself these questions and we will drill deeper into appropriate levels of investment for marketing in our next segment. If you need any help, please feel free to email me.

Square 2 Marketing—helping business owners.

Do It All The Way, Or Not At All

This morning, I attended a workshop at the Four Seasons Hotel, www.fourseasons.com. In case you aren’t aware of their positioning, it’s a 5 star hotel -- everything is high-end. This is great if you want a high level of service.

So the event was very nice, property was nice, people were nice…they almost had the whole package. I wanted to check email before the sessions started and searched for a wireless network. I found a Four Seasons Wireless network available for $10. I was more than willing to pay, get online, and review a few emails.

Unfortunately, the front desk informed me that the program was discontinued and I was unable to get connected -- they just neglected to take down the equipment and disable the network. Come on! Either offer it or not…better yet, at a place like that, where money is no option, PROMOTE THE SERVICE. I am sure many others would have been willing to pay the $10.

If you can’t do it right, don’t do it at all. Or at least actively work harder to make it right!

Square 2 Marketing—helping business owners.

AdWords vs. Search Engine Optimization

We have been talking to a lot of clients lately about the differences and advantages of Google AdWords programs vs. traditional Search Engine Optimization. There certainly seems to be a lot of confusion. Let me see if I can simplify it.

First, both offer marketers real benefits. The primary difference is the speed at which the benefits are delivered and the flexibility to actively manage the program on a continuing basis.

AdWords

• Can be up on the web in under 10 minutes and delivering hits to your website immediately
• Can be actively managed, updated, tested, tweaked, and adjusted on a daily basis to optimize your investment and deliver improved results
• Can be extremely economical -- investment can be limited based on a budget and the budget can be increased over time as results dictate

Search Engine Optimization

• Can take up to 3 months to start delivering results
• While this can be actively managed and performance tracked, it takes time to see if the adjustments improve performance
• The investment is different—it’s up front, ongoing, and set. There are no costs associated with the clicks, so in essence those are free.

The bottom line is these two approaches are simply different strategies to the same end game—driving people to your website.

Our team has created a blended approach that marries the best of both worlds. Start both programs and get the benefits of an AdWord program, while testing key words to be utilized in the longer-term SEO work. Stop the AdWord program as the SEO work starts delivering results. This ensures quick clicks to the site and a more economical and sustainable approach over time.

If you have any more questions, or your own ideas, let us know.

Square 2 Marketing—helping business owners.

The Ace of Cakes

I have become a fan of organizational efficiency and marvel at the effectiveness of teams. So in my travels, I came upon a company called Charm City Cakes. Run by a baker named Duff Goldman, this mild-mannered personality has created an extremely effective, committed, creative team who are delivering the remarkable.

If you know anything about me and our company, I am constantly on a search for “remarkable.” I found it at Charm City Cakes. Here are a couple of the marvels associated with this team.

1. He only hires friends – of course I love the idea, but unfortunately I guess I don’t know as many creative designers and marketing consultants as I would like.
2. His team is extremely production-oriented while delivering extreme creativity. It seems like a dichotomy to me, but he manages to deliver it.
3. While everyone on the team seems to have an area of expertise, they are capable of chipping in and helping to deliver the remarkable, on time, every time.
4. He knows who he is – he doesn’t deliver outside the metro Baltimore area and his process is well-defined. If you want one of his cakes, you do it his way.

Check out his website at www.charmcitycakes.com for more info on them.

Let me know what you think.

Never Give Up

As I mentioned on Friday, last week was a challenge for us. The trick, as I see it, is to never give up. Keep working to improve your people. Improve people by talking with them, coaching them, mentoring them, bringing them together to be on the same page with others in the company.

Keep changing your processes. Change them until they work smoothly. Change them until everyone understands them. Change them until you see the kind of results you expect from your people and your company.

Keep building the best team. Continually interview, hire, review, and upgrade your team until you feel like your team can take you to the World Championship. Keep working on your team until they are so good, they out-think you, out-perform you, and impress your clients before you get the chance to.

But most importantly, never give up, never settle, and despite the challenges, keep pushing, keep improving, and keep trying to be better. Even if it's just a little each day, soon it will be part of your culture and part of your ever-changing company.

Square 2 Marketing—helping business owners.

Take A Deep Breath

It’s Friday. In the spirit of open and honest blogging, I will share with you that it hasn’t been the easiest of weeks. Our company is dealing with fast growth, and while we have had some real successes with clients this week, we have also dealt with some client challenges.

As I left the office this evening, I stopped to take a deep breath. The simple act allowed me to stop for a few seconds and reflect on the week. It allowed me to wind down and think about what went right and what went wrong and it gave me the chance to slow down, to pause, and to mentally center.

The simple act of taking the deep breath was the trigger, but the feeling of reflection and resetting after a challenging week made gave me satisfaction and a feeling of accomplishment. Did I get everything done? No. Was every action successful? No. But we learn from our mistakes and improve, so that on Monday, we start again, refreshed and refocused.

Do yourself a favor -- take a deep breath and refocus. Try it and let me know if it works for you.

Square 2 Marketing—helping business owners.

Let's Warm Up Your Prospects

It’s cold, icy, and snowy today, so the thought of warming up is at the top of my mind. How you warm up your prospects is equally important. One great way to warm up prospects is to provide free educational workshops that allow all your prospects to hear you talk, learn about your approach, personally meet with you, and make that emotional decision to use your firm.

Remember, people make purchase decisions emotionally and then rationalize their decision afterward. Facilitating that emotional connection at a free workshop works well as a warm up.

While the workshop program does take work on your part, potential clients and prospects are hungry for information. If your content is engaging, it will work well to bring new prospects right to your front door. We run our own workshops, and they typically deliver between 50 and 75 qualified prospects.

If you want to talk about how a workshop could work for your business, drop me an email.

Square 2 Marketing—helping business owners.

Love What You Do

Keeping with the theme of Valentine's Day, I was reading an article about a guy who worked for a large company selling something. He woke up one day and quit to start his own company taking photographs of people surfing. His passion turned into a business, where he sold his photographs to others for use in advertising, or as personal artwork.

While I am sure this guy didn’t have a plan when he quit, he followed his passion and that came out in his work. His love for surfing and photography allowed him to perform at a high level and attract attention, converting his passion into a real business opportunity.

Bottom line: if you don’t love it, get out. Follow your dreams, follow your passion and you will likely find yourself in a business that you love.

Square 2 Marketing—helping business owners.

Sales and Marketing – Forever Connected

In short, marketing can generate hundreds of qualified leads, but if the sales team can't take the leads and convert them into new customers, it's pointless to invest even $1 dollar in marketing.

So, sound familiar? Probably, and if it does…what do you do about it? The solution isn’t complicated, but it does take hard work. Sales, like finance, marketing, and operations, needs its own focus. Your sales team needs a strategy, a process, a plan, and all the details associated with that to be effective.

Sales people, left to their own devices, will wander, waste time, and do what is easiest, not what will bring the most revenue. There are so many components to a comprehensive sales strategy that most are often left unattended by business owners.

Here are a few important ones.

- Compensation plan: does it drive the overall business strategy?
- Territory alignment: how are leads distributed?
- Targeting: who are the sales people supposed to be selling to?
- New or current clients: is there a preference?
- Activities: are there specific activities, like collecting email addresses?

Trust me, there are many more issues related to sales. This is the tip of the iceberg. Do these sound familiar? Email me, and let's talk about your sales-related issues. I bet I can offer some simple suggestions.

Square 2 Marketing—helping business owners.

Make Sure You "Talk" To Your Clients

I have a triple split rail fence around my back yard. If you want to know exactly what I am talking about, I provided this convenient link: http://www.masterfence.com/Wood_Fence_4b.JPG

About 6 months ago, a few of the posts and our gate became loose. After calling a couple of well-known fence companies who rudely flat-out refused to help me, I was referred to this guy Greg. I am vague about the details because frankly, I lost his card, can’t remember his name, and of course, no longer have his phone number.

Now it's six months later, and guess what? I need Greg again. The chances of me finding Greg’s information or tracking Greg down through the same resources I used to find Greg the first time are slim. So, Greg…sorry, buddy.

Let’s go back in time and see how Greg could have handled the situation differently and how the outcome could have been a win-win for both me and our pal Greg.

After Greg so nicely fixed my fence, he asked me for my email address. Since he did such a nice job, I happily gave it to him. A day or so later, he emailed me a thank you. Of course, since I have a personal file folder, I saved Greg’s email, especially since I was impressed with his responsiveness and attention to detail. I even forwarded it to my wife, who, by the way, shared the fact that our fence guy emailed a thank you to 22 of her closest girl friends.

Since then, Greg emailed me monthly with little tips on how to maintain my fence, how to keep it looking good, and how to protect it from frozen ground. All of which I read and deleted, but read nonetheless. So when this month’s email showed up, I quickly emailed Greg back, this time requesting an estimate on the work we need. Greg quickly replied, came out to the house and secured the work. Nice job, Greg. Total cost invested in marketing: about $34 a month to email out over 1,700 email addresses. Again, nice job, Greg.

Oh well, back to the search for a fence guy.

Square 2 Marketing—helping business owners.

You Can’t Pick Your Family, But You Can Pick Your Clients

Everyone knows you can’t pick your family, and most of us know you can pick your friends, but did you know you can pick your clients, too? That’s right: you can actually pick and choose who you do business with.

Just last week, we were talking with a successful business owner who insisted that her website pages couldn’t flow down past the size of a single screen. Regardless of how compelling the messages were or how strong the copy, she insisted. Well, despite our encouragement, stories, and recommendations, she held her ground and refused. Immediately, we could see the future.

After working with business owners for over 1o years, the future often shows itself with remarkable clarity. Politely, we declined to work with her, simply noting that perhaps our marketing philosophies weren’t a good match. No harm, no foul. There are many marketing companies who would be happy to build her a website that simply fit the screen.

You see, that future we saw looked something like this: constantly trying to explain "why" to a client; constantly delivering against divergent expectations; and in the end, a client engagement that frustrated our team and the client, perhaps leaving the client with a mediocre experience. We don’t do mediocre, we do WOW! For me, it's as much about our team as it is about the client. The more we like the client, the more our values align, the more they trust us, and in the end, the happier everyone is! And the client…well, they get our patented Client WOW!

It's important to pick your clients. Try it and let me know how it goes for you.

Square 2 Marketing—helping business owners.

Lose A Client Gracefully

Yesterday, I had two separate experiences with companies who poorly handled a client who had made an unpopular purchasing decision. I think it's worth talking about so that we all can learn how to give up a client gracefully.

Personally, I had been involved in a CEO level group designed to help members make better decisions, achieve better results for their businesses, and enhance their lives. This international company provided me with a mediocre experience for about 7 months.

I participated as best I could and tried to make it work. When I decided that it wasn’t right for me and my company, they first forced me to pay for three extra months through March, and then told me not to attend the meetings in February and March, leaving a very bad taste in my mouth overall. Despite the fact that I recommended the program to another business owner, I can no longer say anything positive about the organization. I took responsibility for the situation not working out positively, stating flatly that it just wasn’t the right organization for me. However, they couldn’t smoothly disengage my involvement.

On a personal note, my son, who plays guitar, is moving from a basic weekly lesson program to a School of Rock program where he takes lessons and works towards performing in a concert. When we informed the current provider that we wanted to switch, they actually told my son it was a bad move and that they would be mean to him if he didn’t practice. Ugh, what a horrible thing to say. Needless to say, we are now not referring any business to that company either.

Sorry for the long blog, but it’s so easy to do the right thing, yet so many businesses do the wrong thing. Let me know if you have any similar experiences.

Square 2 Marketing—helping business owners.

Funny How Sales Works

I was talking to a client this morning. They were in the process of implementing one of our sales generation programs called a 10-10-10 Program. This program provides an organized, rhythmic approach to helping sales people get proactive with top prospects. Sales people make 10 introductory phone calls, send 10 packages, and then follow up on the packages the next day.

The program was just a couple of days old, but the client was telling us how there was an interesting result of the program after just a couple of days. After the initial introductory phone calls, the sales people were actually getting appointments before sending out the packages. Hmmm. Sales people made phone calls and actually got appointments. Interesting.

Shockingly, this client isn’t that different from many of our other clients. Until they let us start working directly with their sales teams, many business owners have dysfunctional sales teams. Feel free to implement a 10-10-10 Program on your own, but at the very least, try mandating that sales people make 50 phone calls every week. Track the phone calls. Track the results. I think you will be pleasantly surprised at how even the most basic sales tactic can focus a sales team.

Good luck and let me know how it works!

Square 2 Marketing—helping business owners.

One Month Of Blogs

We talk to our clients a lot about tracking performance. I mentioned that we have around 200 people reading our blog after just one month. I consider that a positive response and one that points toward continuing the program. Over the next couple of weeks we will be expanding our outbound marketing of the blog, in hopes of attracting additional readers.

When I started doing the blog, 30 days ago, my personal goal was to blog every business day and sometimes on weekends. To review my personal performance, this is my 15^th entry. That means we did 14 blogs in January out of 22 business days. That’s not a great percentage, but considering the growth of our business and the time commitments to clients, I’m not going to beat myself up over it.

More importantly, we now have an active blog. This is an achievement from just one month ago. Look at your business the same way. Small improvements can lead to major changes. Don’t beat yourself up if something fell a bit short -- look at the positive impact and continue to work hard to keep improving it.

This month, I will shoot for 18 or of 20 days with a new blog message. Wish me luck!

Square 2 Marketing—helping business owners.