Whether or not a business is profitable largely depends on whether the business owners are planning to be profitable. I know that, in a general sense, every business owner wants their business to be a huge success and that they dream of money raining down on their heads from the sales of their goods and services. Surprisingly, sales success alone does not guarantee profitability. Profitability requires a consistent focus on continuous improvement and diligence in monitoring key performance areas. We look at one of the key profitability focus areas – the impact increasing your exposure has on small business profitability.
Increasing your exposure has several important elements. They generally fall under the marketing umbrella of your business, but when specifically applied to generating profits these specific elements come into much sharper focus.
1. Defining exactly who your customers are or who they are likely to be
Marketing to the the masses is generally a very expensive process. The enormous costs of Television, Broadcast and Print advertising on a large scale put mass marketing beyond the reach of most small businesses. You could spend millions on prime advertising spots only to find it has been a huge failure. When you market broadly, your messages tend to only be generally appealing. This is borne out by typical response rates of between 0 to 4%. To minimise your advertising spend and increase your response rates you need to clearly identify exactly who your customers are, or for new businesses, who your customers are likely to be, and focus your efforts on them.
2. Determining what behaviours are characteristic of these segments
After identifying who your customers are, you need to analyse, in as much detail as possible, what their buying behaviours are. For example, do they often buy on impulse or prefer to do a lot of research? Are they time poor and affluent or are they bargain hunters with a lot of time on their hands? Are they typically family oriented, solo or coupled? Are they city dwellers or suburban fringe? What is the typical age demographic? Are they predominantly male or female? This information is vital input in the development of effective marketing campaigns.
3. Identify where these customers congregate in large numbers
You need to target your customer segments where they congregate in great numbers – at a time and place they are most likely to be ready and willing to hear your message. Preferably, you should be targeting those customers who have already qualified themselves as likely prospects. For example, subscribers to the most popular magazine relating to the relevant subject area your product or service is aligned to.
4. Designing marketing campaigns that strictly address the target segments buying behaviours and aspirations
With the customer segments’ characteristics, buying behaviours and aspirations in mind you then craft pointed campaign messages appealing to them more directly in places where they are most likely to congregate. I have personally seen large corporates follow this approach and achieve response rates ranging from 16% to as much as 54%. Yes, there is more time and research involved, however, from a profitability standpoint is does two things really well and that is it reduces the advertising spend and increases the response rates. In a nutshell, that means more sales for less dollars spent.
5. Maintaining Regular and Meaningful Communication
You need to work to increase your exposure to your client through regular, meaningful communication. You need to ensure that this communication is permission based with the client clearly having opted-in. Having done that, you need to ensure communication is regular enough that they don’t forget you, and not so regular as to annoy your client enough to opt out.
You also need to ensure that the communication is meaningful. Don’t just send out a relentless barrage of sales blasts. Ultimately your client will tire of the communication and eventually opt out. Try to develop a relationship with your client that builds a degree of trust. You can leverage this trust at a later date.
For example, if you are a mobile (cell) phone reseller, try building a relationship by teaching them how to make the most of their new phone. Provide instructions as to how to use a new function. Or advise when sales plans are about to change and show how this impacts them based on their particular usage.
Recommend as to whether they should stay on the current plan or take up the new one – even if it is not in your best interests. You may lose this sale but you can bet your bottom dollar they will come to you next time they need a phone – because in a sea of faceless competitors, they know they can trust you.
6. Brand Everything
Marketing is everything you say and everything you do. Ensure you capitalise on every opportunity to market your business. Plaster your brand on everything you possibly can. This includes all the usual things such as marketing collateral (i.e. advertisements, letterheads, business cards, brochures, packaging, etc.) and things such as uniforms, office spaces, cars, etc. But it also needs to extend to the online world (i.e. websites, email signatures, newsletters, etc).
By ensuring that your brand is on everything, you speed up the rate of recognition. If every communication carries your brand, over time people come to recognise what that brand represents. Research shows people are more likely to choose a brand they are aware of than one they are not.
Because branding is also about everything you do, you also need to ensure that your brand becomes recognised for its superior customer service. First, you need to align your actions in the customer service space to the organisations’ shared business vision. Next, you need to develop your customer service processes to deliver ‘knock your socks off’ service. Make your customers raving fans. Your raving fans are like an army of free salesmen. When your customers become raving fans they happily recommend your products and services to family and friends. Generating word of mouth advertising costs little but can dramatically increases sales revenues.
Karen L. Paiyo is an Australian Small Business Counsellor, supporting and nurturing the spirit of entrepreneurship in the Asia Pacific Region. Karen empowers small business owners by transferring to them the skills and expertise needed to help them take their business ideas from creative concept to profitable reality, faster and with less risk. custom stirrup socks