I Have a Great Product - So, People Will Find Me
It is a common misconception that your products or services alone will attract new business. Great products and services will create return customers once they know about what you have to offer, but how did they hear about you in the first place?
Word of mouth is powerful, and it should never be underestimated, but is it working for or against you? In business there is a common story that most of us have heard. A dissatisfied customer will tell ten people about their poor experience with your company, those ten people will then tell ten other people, and so forth, creating negativity and distaste among current and future customers; while a happy customer will tell no one of their positive experience unless your company’s name comes up in conversation.
How do you reverse that, so that the positive customer experiences are what people are talking about?
The answer is found in advertising and marketing. The question then becomes, how much should we spend to market ourselves?
According to one article in the Small Business section of the Houston Chronicle:
“The U.S. Small Business Administration recommends spending 7 to 8 percent of your gross revenue for marketing and advertising if you're doing less than $5 million a year in sales and your net profit margin — after all expenses — is in the 10 percent to 12 percent range. Some marketing experts advise that start-up and small businesses usually allocate between 2 and 3 percent of revenue for marketing and advertising, and up to 20 percent if you're in a competitive industry. Still other marketing experts counsel a range between 1 percent and 10 percent, and even more depending on how long you've been in business, competitive activity and what you can afford. It's apparent from these differing opinions that the percentage of gross revenue for marketing and advertising depends mainly on whom you ask. They're probably all correct if you know their assumptions.”
Spending up to 20 percent of your revenue on marketing and advertising is ideal, but not always realistic; however, every company needs to have a marketing budget built into their monthly expenses. There is a reason that most of the money made in the United States is from “big business”; they understand and embrace marketing as a tool for success.
Up to 90% (depending on the area) of the businesses in the U.S. are considered small business, but combined they only make up about 10% of the money made. The majority of the money is made by companies who invest in themselves through marketing and advertising.
Walmart, for example, still spends 5% of their revenue on marketing. Why? Because they understand the value and power of advertisement.
If McDonald’s stopped making commercials, would you forget about them? Probably not; however, McDonald’s will always use marketing and advertising as a way to keep customers coming back.
There is a reason that these companies are on top of the business and financial world, and depending on your goals you can be there too.
What are your goals? Come up with a plan to reach new heights, and create a marketing budget that is sustainable on a monthly basis. Test the waters on what is bringing in the most customers, and don’t be afraid to change what’s not working. Don’t quit because you don’t see positive changes right away, sometimes it takes weeks or months to get an accurate read on your marketing plan. Find what works, fix what doesn’t, help your customers find you, and remind them why you are the best.
April Salsbury, MBA is a strategist, an analyst, an operational guru, a recognized leader and C-suite global healthcare executive with drive and focus for competitive markets. Co-host of The Business Forum Show and regular contributor to various business journals, she possess multi-functional and multi-national competencies with more than 15 years experience in business and healthcare. Her expertise is in invigorating revenue growth and infusing value of lean practices in growing companies through improvements to cash flow and operations management.
Fueling revenue, growth and profit, Salsbury & Co. is a consultancy firm focused on helping businesses and healthcare organizations achieve excellency. Our specialists have executive experience combined with deep functional expertise to provide our clients with services that drive real impact and results.
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