Let’s say that you’re a business. People aren’t buying your product because consumer spending is down. That means less revenue for you. Maybe you have to lay off a few people you can’t afford to keep on. But there’s still work that needs to be done. So the work from the laid off employees gets delegated to the remaining employees. But your remaining employees are already up to their noses in work. So what happens? Productivity gets cut. You’re unable to deliver, which in turn cuts your revenue once more. Even less revenue means even less capital to spend on your marketing strategy, especially if you use an advertising agency. The less money you spend on your advertising agency, the fewer chances you have of gaining new customers. Your revenue once again is either reduced or remains stagnant. Everything is snowballing again.
So how do you save your business? Do you simply stop spending money? If you cut down on marketing costs and stop using your advertising agency, you may save money in the short run, but you’ll lose new customers. So what do you do? How do you reconcile the facts that the less you spend on your advertising agency, the fewer new customers you will have, but the costs of using an advertising agency is simply out of your budget because of low consumer spending? Do you cut off your advertising agency completely? Do you go all out and give massive amounts of money to your advertising agency so they can saturate the market with your ads, all while your simply sitting and hoping for the best? Is there some sort of middle ground?
The answer is quite simple really. You don’t need to spend more. You just need to spend smarter. If you’re spending a couple of grand on some sort of traditional media advertising, lets say cable advertising or television advertising, just for one commercial, but that commercial isn’t bringing in any more business than usual, then you need to stop paying for that type of marketing.
Suppose you’re the corner coffee shop. All the people living around you that need coffee will come to you for coffee whether or not you advertise to them. So why would you spend ridiculous amounts of money on a marketing strategy that targets those people that are already coming to your store? That type of marketing is not worth the investment. If a marketing strategy is not bringing in any NEW customers, then it is worthless. Any advertising agency should know that the purpose of a marketing strategy is to gain new customers, not keep existing customers (that's what customer service is for).
You need to figure out what amount of customers you would have regardless of your television advertising. Let’s say that with the cable advertising, you have 105 customers. But 100 of those customers would come to you anyway, with or without having seen that commercial. So that commercial is only bringing in 5 new customers. Now let’s say that the commercial cost you $5000. But those 5 customers only gave you $1000 (yes, I know, that is some pretty expensive coffee, but go along with me here). Since the commercial had no effect (either positive or negative) on the 100 customers you already have, the money they gave you is irrelevant. The $5000 you spent on that commercial only brought in $1000. Congratulations, you have just now lost $4000. That type of investment may not be a good idea in this economy.
A good marketing strategy doesn’t focus on targeting customers you would already have. In fact, a good marketing strategy doesn’t waste any time with those customers at all. A good marketing strategy only focuses on targeting the customers that you don’t already have. These are the customers that will bring in more money. These are the customers that will make your investment in a marketing strategy worthwhile. If your business is snowballing out of control, you can't just stop spending money on advertising all together. You just need to spend on an advertising campaign that will bring in NEW money. Don't spend more, spend SMARTER!
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BOC Partners, Inc. is a privately held marketing company located at 1030 South Ave West, Westfield, NJ. We've been around for 25 years. We specialize in both online marketing and traditional marketing. Visit us at http://blog.bocpartners.com, http://bocpartners.wordpress.com, or http://www.bocpartners.com.