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Monday, May 30, 2011

The Advertising Budget

This is a tricky one and honestly, there are a few ideas out there on how to best determine your advertising budget.  Frankly, at the end of the day you can’t spend what you don’t have, however, if you’ve planned correctly and/or are in the process of starting up a business, then you need to have enough working capital put aside to get you through, this includes your advertising budget.

The first thing to remember is that any calculations you make using Gross Sales must be based on the Gross Sales you WANT to achieve, your projected Gross Sales – not what you have achieved or may be currently achieving.  So if you did $100,000 gross sales last year but you want to reach $300,000 this year, you must base your calculations on the $300,000.

So what are the calculations?  Well the easy “rule-of-thumb” approach is to simply take 5%-6% of your projected Gross Sales.  So if you want to gross $500,000 your advertising budget should be $25,000 to $30,000… in theory.  Unfortunately, if you don’t have a very good location then in reality you should be spending more than this on your advertising.

What this tells us is that one thing that this method fails to take into consideration is your location.  The theory is that if you have a strong, high visibility location then you’re paying a higher rent, therefore you should need to advertise less.  If you’re saving money on rent with a less desirable location, then you’ll need to spend more on advertising.  The other thing the above calculation doesn’t take into consideration is your markup.  So, another means of calculating your advertising budget taking these two factors into consideration is:

1)      Estimate your Projected Annual Gross Sales
2)      Budget 10% to 12% of total sales for Cost of Exposure (which is rent + advertising)
3)      Multiple this budget by your store’s average mark up (for example 92%)
4)      From this total, deduct your annual rent
5)      The remaining balance is your advertising budget

In action:
1)      $500,000
2)      Multiple 1) by 10% and 12% = $50,000 to $60,000
3)      Multiple 2) by 92% = $46,000 to $55,200
4)      Subtract $18,000 from each of the numbers in 3)
5)      Advertising budget = $28,000 to $37,200 for the year

As I mentioned, there are several different ideas on the best way to calculate your advertising budget, but for the purpose of this article I am only going to cover one more.  This one is based on the cost of acquisition of a new customer.  There’s a couple of ways to look at this, but I’m going to go for a simplified method on a much smaller scale.  So for example purposes, let’s say that your average customer is worth about $300 per year to you in gross sales.  So in theory, to break even on your advertising you need to acquire one new customer for every $300 you spend in advertising, per year.  Unfortunately, that’s often as far as a business owner will take it and they will look at it only in terms of short term spending.  But in reality, advertising is a long term endeavour.  So a better way to look at it is on an annual budget.  $300 per month equals $3,600 per year which should then result in 12 new customers per year to break even.  The problem comes in when businesses expect to see the results of new customers on the same monthly schedule that their advertising expenses are on.  The other problem comes in when businesses only look at the direct response and not the residual response.  By this I mean, you place an ad and you get a new customer, you do a good job with that customer and they start referring other new customers.  So while your ad brought you the direct response of one new customer, the residual effect of your advertising was in fact several new customers.

Seeing it in action locally

A current client of the Gateway Gazette recently expressed her surprise at the effectiveness of long term advertising.  Donna Turner, a massage therapist in Black Diamond, commented that had I tried to tell her a year ago that she will see more results after 6 months or more she never would have believed me.  In fact, it was often her practice to run a small business card size ad for the duration of about 3 months and then stop the ad unimpressed with the lack of response – regardless of where she ran the ad.  However, in her last marketing plan she made the jump to run an 1/8 page ad plus a small Business Directory ad and committed to keep it going for a full year with no breaks.  As was the pattern from the past she was rather discouraged after the first 3 months.  However, once she passed the 6 month mark and now moving into around 9 months she is simply tickled pink.  She has been tracking the new clients that she has been getting from her advertising, specifically with the Gateway Gazette, and has been rather astounded at the number of new clients she is now getting on a continuous, consistent and regular basis, specifically from the Gateway Gazette.  During another conversation she also commented in passing that she has also been getting a fair number of new referral clients recently.  Forever in work mode, I asked her if she was also tracking which customers these new referrals were coming from.  As it turns out, yes she had been tracking who was giving the referrals, but she had not correlated them back to the customers that had come specifically from her Gazette advertising.  She is now in the process of working this out, but just from the conversation we already know that the total number of direct and indirect new customers she has attained via her advertising with the Gazette has far exceeded the cost of her advertising.

Donna is an excellent example of how many small businesses think in terms of their advertising.  She has also given me permission to offer her name up as a reference for the Gazette and I invite you to contact her to hold your own personal discussion and ask your own questions.  (May I also be so bold as to recommend booking a massage, she certainly knows what she’s doing and it’s a marvelous treat to ease our aging muscles – no matter what age we are!)

Monday, May 23, 2011

Don't get lost

Today I find myself contemplating the erroneous and irresponsible way many businesses approach their marketing.  It’s scary and even scarier is the number of small businesses who take a hap-hazard approach when at the end of the day they simply do not have the advertising budget to throw away like that.  For every business, but small businesses in particular, it is imperative to make every dollar count.  Most business owners will whole heartedly agree with that statement.  So why is it then that most small businesses are so entrenched in “media hopping”?

You don’t have to be a marketing guru to do a quick google search that returns thousands of results from amateurs to experts all saying the same things: Repetition and consistency; frequency; the right headline; the right ‘copy’; your ad has to get noticed; you need to use the right words…  It goes on and on.  So why is it that so many small business owners feel compelled to take the position of “Well that’s all fine and dandy, but it won’t work for my business.”  or “But my industry is different.”  Really?!

I’m sorry but you have to face the fact, “your” industry and the basic premise of your business is not unique.  Again, a quick google search will tell you that.  So why fight it?  Rather than throwing good money after bad; rather than making excuses as to why each media vehicle doesn’t work for your business; why not focus on the true source of the problem… your message.  It’s not going to matter “where” you advertise if you’re not getting anyone’s attention.

The current buzz – online, Facebook, Twitter, Social Media, Viral marketing . . . THAT’S where the people are, THAT’S where media, news and information is and where marketing should be taking place!  What astounds me is that the same people who spout this advice are often the same people who complain about the quality of information, about the gossip and pettiness of the conversations (if they can be called that) taking place on the “have to be” places of Social Media.  For those of us who do or have partaken in Facebook and Twitter, we understand the overwhelming amount of information that is getting thrown at us and how we pick and choose what we are going to read and absorb based on what grabs our attention.  So at the end of day, it still comes back to the traditional concept of “what” your message says.

The moral of this story?  You need to place your focus on your message before you get sucked into the blackhole of Social Media that will have you marveling at your sudden loss of available time and productivity.  Don’t confuse my convictions about your marketing message as a siege against the Internet or Social Media – you NEED to do these things – but if you’re not doing them right they will waste your time.  But first you need to spend your time researching YOUR industry, and the messages you need in order to cut through pages and pages of textual information that are now flooding people by the hour (no longer by the week or day).  If anything, it is even more important than ever that you have the right message that will get your customers attention or quite frankly, you won’t stand a chance.  Don’t forget that in our economy EVERY business is your competitor, not just businesses that offer similar products or services.  Consumers are not just deciding “Do I go with provider A or B” – they are deciding “Do I go with product A to Z”, they have so many options available to them that you have no choice but to sell them on your industry as well as on yourself.  If your message isn’t getting through to them, it’s not going to matter where you put it, it will get lost. 

Tanya Thibodeau

Monday, May 16, 2011

To consult or not… that is the question!

Periodically there is a surge of popularity in hiring on “Business Consultants”.  It would appear the trend is on again, as in the last 2 weeks I have had several people reference to me the fact that they are planning to work with a Business Consultant.

Whenever someone makes this comment I involuntarily cringe. In truth, it’s an unfair reaction. It’s much like saying because Lawyers in general are stereotyped; all lawyers must be the same. Or because someone has a tattoo they must be a bad ass (I have two by the way). None-the-less, I get real nervous for small businesses when they announce their plans to work with a Business Consultant.

I understand the reasoning all too well – I’ve hired two different ones on different occasions with different businesses and have met with several over the years. Their fees were all well into the multiple thousands.  However, I had the benefit that most businesses don’t in that in both cases I had the opportunity to “trade” on the services and as such wasn’t out-of-pocket the “cash”. But even so, in both cases I swore I’d never do it again. Through my experiences I learned several things and I’d like to share some of that knowledge with you in the hopes of helping you make more thoroughly informed decisions.

Most important is to understand what exactly the role of a Business Consultant is.  There are many different types of Business Consultants and they do not all cover the same types of services.  So if you decide to take the step to work with a Business Consultant, it’s important that you have a clear idea of what you are wanting the Consultant to do for you. 

Because of the nature of my business and how broad based the Business Consultant industry is, let’s just have a look at it from the angle of advertising and marketing.

One of the biggest things to keep in mind if you go the route of a Business Consultant for help with your advertising and marketing is that their fees, in the majority of cases, will not include the development or placement of your advertising and marketing. So make sure that you specifically ask about this. Several thousands of dollars spent to have someone tell you that you should be developing a website, social media, print ads, radio ads, print materials etc is a lot of money that could be put into the development and implementation of those forms of advertising.

Now on the other hand, if the Business Consultant you are thinking of working with will be helping you to actually develop your marketing materials, then great, that is a much different story.  Or another avenue might be a Business Consultant whose service is to teach you “how” – again, terrific.  In my experience, these types of Business Consultants are the rare gems we all hope to find. 

So in these cases what you want is references. You want to see real live proof of what they have already achieved for other businesses and you want to hear what the opinions of those other business are. If you’re thinking of going with someone new in the industry who doesn’t have the references yet, that can be ok – just be sure you are paying a proportionately lower fee because of the lack of track record. Don’t forget, just because someone says they can help you develop your advertising, or just because they know the ingredients necessary for developing good advertising, doesn’t mean that they can actually do it for YOUR business.

We’ve covered this before in previous articles and if you’ve been reading my articles, you already know all the pieces needed for effective advertising (the grabber headline, the compelling offer, the customer benefits and the factual statistics). But does that mean that you know “how” to create these pieces? In my experience, the professionals that know how to create these pieces are primarily the “copy writers” – these are the people that know how to put the right words together to cause your ads to be truly effective… whether offline or online, in print or on air – words are words and at the end of the day having the right words is what matters most. 

Roy H. Williams, is a very reputable expert in the world of marketing and advertising. The following is an excerpt from one of his recent articles (in some cases there simply is no point in trying to reword something that is already perfectly worded):

I've never met a business owner whose advertising failed because they were reaching the wrong people.

Advertising fails when people have

1.     no knowledge of the offer. The ad is easily ignored.
2.     no interest in the offer. The offer is (A.) irrelevant or (B.) misunderstood.
3.     no trust in the offer. The claims made in the ad are not credible.

These problems can be solved by

1.     getting the attention of the people with words and phrases that are new, surprising and different.
2.     offering the people what they want to buy (instead of trying to convince them to buy what you’d like to sell.)
3.     supporting your claims with examples that agree with the experiences of your prospective customers.

Target the ‘right customer’ through your ad copy, not your media selection. Reach as many people as your budget will let you reach repetitiously, regardless of their age, sex, or income bracket. Choose words, phrases and points-of-view that will resonate with them. Do this and you will be amazed at how many different people suddenly become 'your customer.'

Basically, if you do decide to go the route of a Business Consultant it’s because you want answers to questions and you want to see results. So when interviewing Consultants, make sure that they can clearly outline for you exactly what you are going to get for every dollar you spend, exactly what questions they are going to answer for you and what results they expect you to see.  I’ve just seen it happen so many times when businesses end up spending thousands of dollars on a Business Consultant and end up with more questions than answers.  Please understand that I am not saying all Business Consultants are bad or a waste of money – I am simply cautioning you to be extremely diligent in your research and interview process – and if something doesn’t “feel” quite right or if they take on a highly “sales” type approach with you, be extra careful.

If what you really need is someone to sit down with you and walk you through the steps you need to take to put your marketing together, the components you should be including and how to go about getting it all developed, give me a call. This is a service I’m happy to offer. I have the tools, background, experience, knowledge, resources and connections to bring it all together and I can guarantee that my fees will be 25% to 75% LESS than someone who has hung their shingle as a “Business Consultant”.  It’s not a service I widely promote because it is time consuming and many of the businesses I deal with are working with budgets of a few hundred dollars, not several thousand – but if it’s time to buckle down and get serious about your marketing, I can get you to where you want to be.

Tuesday, May 10, 2011


"The talent of success is nothing more 
than doing what you can do well, 
and doing well whatever you do 
without thought of fame.
If it comes at all it will come 
because it is deserved, 
not because it is sought after."

~ Henry Wadsworth Longfellow ~

Sunday, May 8, 2011

The importance of your front line

I’m going to touch on a bit of a different topic today that many businesses often over look when they think in terms of their marketing.  This idea was spurred a bit by my last article with reference to choosing the right person to attend Trade Shows on behalf of your business.  This addresses staffing. 

Many businesses think of their staff more in terms of their experience/ability to do the tasks the job requires.   However, what they don’t often consider is the impact/influence their staff has with their customers.  But when you stop and think about it, in many businesses, it is the “staff” who actually deals with the customers far more than the owners.  This is especially true with retail or when there is an office setting with people answering the phone.

So you spend your time and money creating all kinds of different forms of marketing.  But how much time (in particular), and money, are you spending in training, monitoring, reviewing and following up on your staff?  You make the decision to track your marketing – are you 100% sure that your staff are carrying out your wishes?  More importantly, are they doing it accurately and the way you want them to?

Have you ever had a trusted stranger “spy” on your staff?  Also known as a “Secret Shopper”?  How’s your staff treating your customers?  Are they smiling every time someone walks in?  How about when they answer the phone?  May sound silly, but yes, a smile on your face when you answer a phone will come through in your tone and the person on the other end will “hear” your smile.  If your phones have call display there is always a possibility that the way your staff answers the phone when they know it’s you calling is very different to how they answer to a number they don’t recognize.

So how is this all relevant to your marketing?  Every person in your business is an extension of your business; they’re an extension of you; they’re an extension of your marketing – they are even a form of marketing in themselves.  How often have you eaten at a restaurant and had spectacular service? The kind of service that quite simply made the entire experience the best you’ve ever had.  Suddenly the food tastes a little better than it actually is; the atmosphere is a little nicer than it actually may be.  You eat with a smile, you leave with a smile, you tell everyone you know how wonderful it was (with a smile) and you return with a smile.  The flip side?  A horrible server that makes even the most exquisite food leave a bad after taste, followed by a miserable experience that you also tell everyone you know all about (without a smile) and you don’t return.

Your staff pretty much makes or breaks the promises you make in all your other marketing and they highly impact whether or not a customer will return.  Unless you’re the only gig in town or the offer they simply cannot refuse – your staff had best be playing the role you want and need to help your business grow or all of your other marketing efforts are going to be a huge waste of time and money.

Happy Mother's Day

Who ran to help me when I fell,
And would some pretty story tell,
Or kiss the place to make it well?
My mother.

~Ann Taylor

Tuesday, May 3, 2011


“We make a living by what we get, 
we make a life by what we give."
~ Winston Churchill ~

Monday, May 2, 2011

Trade Shows - worth it or not?

This weekend I managed to find some time to stop by the Okotoks Trade Show.  It was great to see such a terrific turn out by both the public and businesses and with so many professionally presented booths too!  Although I didn't have time to speak with every business, the ones  I did speak with offered some very positive feedback - which is great to hear!

Personally, I think for certain businesses/industries that Trade Shows, Business Expos, whatever name they go by, are a fantastic means of marketing a business.  You can really gain some wonderful exposure.  Actually, let me amend that - I think these shows are potentially beneficial for all businesses.  What I find unfortunate is that there are always some businesses who really aren't exactly sure what they should be using a Trade Show for or how to do it effectively.  Of course the answer to that is going to be different for almost every business, however, the basic concept and process to figure it out would pretty much be the same for every business.

For example, you would start with a series of questions to ask yourself - and better yet, ask your partners, colleagues, staff and maybe even some customers too - brainstorming can be a superb way of gathering very valuable information and ideas.  I almost feel a bit bad posting this article after-the-fact, but in reality a review of what worked and didn't work after something is finished is often the best time for the review, while things are still fresh in our minds. The trick is to remember to implement some of the great ideas the next time it rolls around!

1) Why do you want to attend a Trade Show?

2) What is your goal? Basically, what exactly do you want to achieve to be able to walk away from the Trade Show saying "Wow, that was awesome and what a total success for us!"  Make your goal specific and realistic - "I want to book two free consultation appointments during this show."

3) Who will man your booth?  The answer to this should come from a combination of not only who has the most available time, but also of who is the best person most capable of handling such a public, face-to-face encounter? Some business owners really should understand when perhaps their particular skill set may not be in prospecting at a public event.

4) What are you going to track at the show, how are you going to track it and what are you going to do with the results?  Draws are great, everybody likes to win free stuff, especially if it's cool - and look out if it's geared towards kids!  But before taking that step it's probably a good idea to spend a bit of time thinking it through first.
a) Who are your customers?
b) Is your draw prize relevant to your customers? (or does it perhaps just make you stand out as the cool booth at the show? Kinda like the house at Halloween who gives out the awesome chocolate bars rather than those unidentified objects nobody likes.)  
c) Is your draw prize relevant to your business?
d) Does your draw prize leave room for potential up selling or repeat sales after the fact? (Isn't that tacky?!  Not at all, if it's done right!  Let's face it, the ultimate reason you're at the show in the first place is to get new customers,  so wouldn't it make more sense to give away something from your business that is perhaps a consumable,  or that possibly has some cool add-on features?  BUT make sure you're giving away the vacuum with encouragement to buy the bags from you too - that's you're consumable up sell.  Don't give away the bags hoping to up sell on the vacuum!)
e) What are you going to do with all of the other entries that you received?  Keeping in mind, that if you've picked your draw prize right, every single one of those entries is either an existing customer or a prospect for your business.  So it's probably a good idea to have a follow-up plan in place!

A bit more on the note of draws, I noticed a fair number of booths who actually had draws and give-aways geared specifically towards kids, yet their business was really in no way directly related to kids.  I understand the concept and reasoning behind this, unfortunately, many of these businesses are missing a key change in society (albeit a sad one) - it is no longer common practice that kids draw their parents to a booth. "Mommy look at that! Can I have one?.... Can I enter my name?...." etc - Oh sure the questions still get asked, however, you often hear one of two responses "No and if you ask me again we're leaving." or "Ya sure, go ahead." as the parent goes off in a different direction. In the first scenario you just became an evil force for the parent to now have to deal with. In the second scenario you've got 30 seconds of undivided attention from a 6 year old who can't even read your business name.  Hmmmm.....

Am I saying you should ignore the kids? Definitely not - but using them to draw the parents in isn't as effective as it used to be.  A far more effective approach is to get the parents attention, entice them and draw them in and THEN offer something cool to the kids like it's your little secret.  Kids love the attention and to be made to feel even just a wee bit special and parents can't help but notice the compassion and generosity - now they both think you're cool!  ;-)

On the flip side, it's amazing how many businesses also do the opposite and try to ignore the kids with the very clear body language screaming "Why the h*** did you bring your kids with you?!"  Sorry guys, but the days of "Children are meant to be seen and not heard" are long gone! *sigh* I know, it's depressing.  But, the good news is that they really are still a great tool to strengthen your relationship with their parents - if you do it right. (For those of you who don't know, I am the mother of two .... alright .... terrific kids .... although dreams of duct tape do often plague me, I have to admit that I am rather proud of them!)

When it comes to Trade Shows I think there really are only two other key points that spring to mind.

1) If you're going to put the money out to have a booth - make sure someone is there at all times!  The people who come to these shows are looking for information and when a booth is of interest to them, they want to be able to meet a person and discuss their questions.  A pretty display with some brochures and no people is almost as frustrating as those voice-activated customer service phone menus!

2) When you're choosing the right person to man your booth please do not think of it in terms of "who will cost me the least amount of money per hour" - because at the end of the show, that person will have cost you the most in lost prospecting and sales as they find sitting in the corner texting their friends a wee bit more interesting.  Don't kid yourself - it really does happen.  Come to think of it, I should take photos of it next time!  ;-)

Good grief, well apparently my whole goal of "I'm going to keep these articles short" is a lost cause! The harder I try to at least keep them under 1,000 words the more I go over! Ah well - if you've read to the end I guess it wasn't all bad! :-)

One more quick note that I'd like to make is that I'm starting a Forum geared towards small businesses in Alberta.  You guys are awfully quiet with comments on the blog, so we'll have to see how it goes but over time I hope you'll find it a useful tool to share ideas and get answers to specific questions.  You can access it here: