I am writing a blog series on how to start a business. If you’d like to review previous posts on this series, you can find them here:
So You Want to Start a Business
Revenues, Direct Costs and Expenses… Oh My!
How Can You Earn More Revenue without Spending More Time
Direct Costs and Gross Margin
Keep Expenses LOW!
Profit is NOT an Ugly Word
Creating a Financial Forecast
Sanity Check – Does your Business Make Money?
Market Research… it’s about the Questions!
Do Free-Samples Work?
As we talk about the complex topic of marketing, it is important to better understand what marketing IS; and what marketing IS NOT. In order to develop a marketing plan for your business, you need to understand the thinking process your clients will go through to buy your stuff. There are as many buying processes among people as there are people, but buying processes tend to have some common elements.
Joe’s Oil Spill
I want to try to illustrate a simple buying process with a home owner named Joe. Joe has an accident at home where he spills motor oil on his new carpet. He doesn’t want to buy new carpet, and so he hopes there is some company that can clean his carpet for less than the cost of new carpet. He gets on Google and searches for “clean oil carpet Anytown, USA”. Up pops a list of carpet cleaning services. He clicks on a few that have names that catch his eye. He visits a few web sites and calls a few that he feels can do the job. After he gets prices from five different companies, he picks the one that has the second lowest price to clean his carpet.
Although we make buying decisions all the time, we seldom stop to think about them. If you are a business owner, you need to think about these buying decisions all the time. Let’s ask some questions: How did Joe search for a carpet cleaning company? Why did he use the internet instead of the Yellow Pages? Why did Joe select only a few of the listings on Google, instead of all of them? Why did he pick the listings he picked? Why didn’t Joe pick the lowest priced carpet cleaning quote?
Most of you are saying, “it’s just dumb luck.” “Of course you go to Google to find anything.” “It only makes sense that Joe would search through a limited number of sites because he values his time.” And, “Joe probably didn’t pick the lowest price because the cheapest is never the best.”
This is the biggest mistake that Small Business Owners make. They assume they know why clients will purchase their products. That’s why I believe that starting a dialogue with prospective clients is so important (Market Research). Let’s go back in time… before Joe ever needed a carpet cleaning service. Let’s say, you happened to call Joe prior to his oil spill. You ask the following questions; and got the following answers:
Cleaner: If you were to mess your carpets and needed a cleaning company to clean them, how would you search for that company?
Joe: I would search Google.
Cleaner: What search phrase would you use?
Joe: “clean carpet Anytown, USA”
Cleaner: What features of carpet cleaning would be most important to you in making a decision?
Joe: Reasonable price; guaranteed clean; environmentally safe products; friendly service; quick response.
Cleaner: Understanding you want to pay the lowest price possible. What price do you think is reasonable?
Joe: I don’t really know. I suppose, I would weigh the cost of replacing my carpet with the cost of cleaning it. Then I would shop around for the best price.
Cleaner: So, if the cleaning company were to offer environmentally safe products, but cost more than a company that did not offer environmentally safe products, which company would you choose?
Joe: I’d probably go with the environmentally safe products as long as their price was less than the cost of replacing my carpet.
I hope hat you see the huge value of this short conversation. You’ll certainly need to weigh Joe’s responses with many other conversations you have with prospective clients. However, you can quickly see the value in understanding how your customers make buying decisions. If Joe is your typical target client, you will probably have a Google AdWords campaign; make sure your website looks professional, advertise environmentally safe products, and shop your competition to make sure your prices are competitive with the search phrase Joe gave you.
This conversation could have easily gone a different direction. If you called an older person, they may have looked for you in the Yellow Pages instead of the internet. They may have not cared at all about environmentally safe cleaning products. This is why you need to segment your markets. In the case of our cleaning company example, you may have a completely different ad in the Yellow Pages than you have on your website.
Anatomy of the Buying Process
Let’s dig into this ‘buying decision’ a little deeper. Here is a simple list of steps taken by most buyers:
Pre-Education (Optional) – Learn about a need they did not know they had.
Want/Need – Have a desire to buy a service or product they cannot provide themselves.
Learn – Educate themselves on the best type of product or service for their needs.
Shop – Try to find the best provider of the product they want to purchase.
Purchase – Buy the product and/or service.
Feedback – Let the world know how the product or service provider did.
Anatomy of a Selling Process
It’s not surprising that most successful businesses try to mirror the buying process with their selling process. However, a strong marketing effort will preempt the buying process.
Market Research – Learn what prospective clients need, want and how they will eventually shop for your product/service.
Product Positioning – Revise offering, pricing, advertising and features to suit your target clients.
Pre-Educate Buyer – Offer free-samples, seminars, or personal meetings to educate your clients either on their unknown need; or key features of a known need.
Sell – Ask for the purchase from your prospective client.
Solicit Feedback – Ask for feedback to help you improve your product and/or service; and also ask for a reference if they are satisfied with your product or service.
Be Where Your Clients Are
In order to effectively market your product or service, you need to ensure you are asking the right people the right questions. In order to do this, you need to genuinely identify your target audience, and be in a place where they show up.
In my previous post I talked about giving away free-samples in order to quickly educate your prospective marketplace. Now, you have to find out where your target market of clients resides. In the image on my last post, is a woman with a table in front of her giving away free tastes of a liquor.
I noticed that she is set up in front of the candy section of a retail store. My guess is that most people shopping for liquor may go to a liquor store… so I think she may have better luck in a liquor store selling her specific product. The point I am making is if you want to sell to a specific audience, you first have to market to where they shop.
Try 5 Marketing Strategies
There are an almost infinite list of marketing methods to attempt to educate people about your product and/or service and differentiate yourself from would-be competition. And.. there is no recipe for the perfect marketing method. The reason there is no perfect marketing method is because every business is different. As a new small business owner, if you try to focus on too many marketing methods, you will most likely fail at all of them. However, if you try to few marketing methods, you will often pick one that doesn’t work and quickly get discouraged.
If you are unsure of where to start with your marketing methods, here is a concise list of 50 marketing techniques for small business owners.
Track Marketing Strategy Success
The key is to try to track responses to your marketing efforts and understand which ones work best for you. In many cases it comes down to asking your customers simple questions… like, “How did you hear about us?” “Why did you select us over our competition?” “Would you refer our service to a friend?, why/why not?”
Be Patient, But Pay Attention to Trends
Many small business owners give themselves a very short amount of time to be successful at their newly chosen business venture and quickly freak out when a marketing strategy is not working. You should give each marketing strategy sufficient time to start bringing in customers. I recommend at least 90-days. With that said, there are also trends you can track to see if your strategy is working or not.
Let’s say that one strategy you have is starting a Facebook page for your company and getting people to like your page so that they can read your cool blog posts. But you realize that few people are liking your Facebook page; and even fewer people are visiting your web site as a result of your Facebook page. You have had your Facebook page up for 20-days and the likes on your Facebook page have not changed. You need to figure out how to get people to like your Facebook page; or you need to move on to a different strategy. Instead of deleting your Facebook page, you may start attending networking events and ask people to like your Facebook page; or find another strategy to shore up your first strategy.
Marketing is great; and a lot of people get paid a lot of money to come up with cool marketing strategies; but sales are what pay the bills of any small company. In my next post, I will cover the Sales Funnel and Selling. If you get tons of prospective clients to become interested in your product or service and cannot sell them your product or service; you will go broke fast. Stay tuned and learn how to SELL in my next post.