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By Sarah Warren, MBA
Note: The following article was originally published in Chamber Connection (November 2010), the monthly newsletter of the Ruston Lincoln Chamber of Commerce.
People often ask, “What’s the cheapest way for me to promote my business?” And my tongue in cheek response is that they should print a deck of business cards, put on their best walking shoes and then hand out those babies door to door.
Sure it’s cheap, but effective? Not necessarily.
The problem lies in using the word “cheap.” Instead, the correct question is, “What is the most cost effective way for me to promote my business?” But for that question there is no single answer applicable to every business.
I really hate to answer “it depends” to any question I’m asked, but in terms of marketing there just isn’t a one-size-fits-all answer. What sells Italian loafers probably isn’t going to sell specialty medical services or takeout pizza.
For some, the most cost effective method may in reality be handing out business cards. For others the best tactic might require spending $100 each on qualified prospects.
To determine the best approach for your business, first determine your goal.
Do you need to sign on 5 clients or 5,000? If you only need to sign on 5 new clients, you should probably take a direct marketing approach. If, however, you need to recruit 5,000 new customers, then you’re probably looking at a broader, mass approach.
The approach is somewhat determined by establishing your estimated response and conversion-rates. A response rate is simply the percentage of people who will respond to your promotion, and the conversion-rate is how many respondents you convert to customers.
So, working backwards, let’s say you have a goal of gaining 5 clients. You think you can convert half of the people you meet with, so you’ll need to meet with 10 clients. And from prior experience you think that you can get 20% of people to respond to your promotional efforts, so you’ll ultimately need to reach out to 50 prospects.
Another factor to consider is how valuable a client is to you. Continuing our example, let’s assume those 5 clients can make you $100,000 (i.e. $20,000 each), so it may be worth spending $1,000 each to sign them up as clients. Carry out the math and that would translate into spending $100 each for your 50 initial prospects.
The next step is to brainstorm what you could do for $100 a person that would (1) put you in front of the 50 most likely prospects and (2) give you maximum exposure. That might look like a by-invitation-only luncheon, an ad in a niche publication, a multi-piece direct mail campaign or a fancy promotional gift.
Mass media, conversely, costs much less per impression and provides thousands of impressions, making it better suited to a company with broader appeal, say for example, a fast food company. The major downside for mass media is that the exposure time is typically very brief, so a higher frequency is necessary to be sure the message gets through loud and clear.
My best advice to small business owners is to be thoughtful but also creative when trying to push marketing dollars to their limit. Cheapest isn’t always best.
Sarah Warren is the co-owner of Emogen Marketing Group, a full service marketing firm in Ruston, LA and can be reached at sarah@emogenmarketing.com.
