How well do current marketing options work for your business?

Copyright 2008 Dennis S. Vogel All rights reserved.
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Subject: How well do current marketing options work for your business?

Below is a warning about "word-of-mouth".

What I've written below may seem a bit complicated either because you haven't learned this essential part of marketing or because I didn't describe it clearly. Either way, please let me know if I should clarify this.

To paraphrase what Jay Conrad Levinson & Jay Abraham wrote, the only expensive marketing methods are those that don't work optimally. If you pay $1 for a lead that doesn't convert (purchase/become a customer/client), it's an expensive lead. If you gain more money than you pay to attract a client & fulfill his/her order (sell a product or service), it's inexpensive.

You may seem to lose a bit of money on the front end (the 1st transaction) but you can gain more profit on the back end (in the later transactions). If you invest $50 to gain a client who invests $2,000 in what you offer (whether it's in the next transaction or multiple transactions) you have an inexpensive lead.

If you invest $50 & attract somebody who invests only $25 in what you offer, but refers 2 others who invest $100 each, you had an inexpensive lead.

You may need to determine why you attracted the $25 client when s/he probably isn't in your market niche. You may need to improve your aim. Determine the different traits of the $25 client & those who were referred.

In this example, we'll assume you delivered the same message on the same day to 20,200 unique individuals (there's no overlap in these sets [don't you just love it when somebody uses Algebra?]). Would you rather invest:
1- $50 to reach 200 people of whom 50 convert? - OR -
2- $200 to reach 20,000 people of whom 500 convert?
Choice #1 would get you 50 leads for $1 each.
Choice #2 would get you 500 leads for 40 cents each.

Don't answer yet!
In Choice #1, you converted 25% of those who received your message.
In Choice #2, you converted 2.5% of those who received your message.
Maybe a different headline, offer, call to action, sales copy or a totally different message (ad) would drastically change your results.
Choice #1 is more efficient, but we don't know yet which choice is more effective.

What I'm writing seems to depersonalize people. I hope I'm not perceived just as cold & calculating, because I have other good traits besides these.

I won't get into formulas, just simple math. Before I continue with this simple math, I want you to understand converting prospects to clients.

Let's say each of these people (your converted leads) bought from you today. Would you be able to serve (pay sufficient attention to) 550 people & supply what you offered (fulfill their orders)? You may feel burnt out & have frustrated 250 of them. Those you did adequately serve may've been satisfied enough to buy, but not impressed enough to refer others to you. The frustrated 250 may give you negative word of mouth.

In general, many people complain more than they praise. They expect - at least - adequate service, if they get less they complain. If they get better service from you, they may think about referring others if you fit into their conversations.

They may not complain to you because they may think it wouldn't do any good & maybe because you don't seem to care or you may retaliate. If they never bought from you before, they may think inferior service is typical. If you're tired, you may seem apathetic & they may think complaining to you would be a waste.

While we're on this subject let's study "convert". When people get your message/ad, then buy from you, they convert. If you serve them as well as or better than they expect, they'll buy from you more often. Then they become converts. It's not quite religious, but the process is similar. In effect, when you're marketing, you're proselytizing & trying to get current proselytes to be zealots.

(NOTE- Please focus on positive connotations of "zealot".)

Why would you want zealots? They're more apt to spread the word. They're also less apt to be proselytized by others. Anybody who doesn't buy from you may be buying from somebody else. You can't afford for your nonzealous customers to talk to others because those others may say something like "I buy from (competitor's name) because I get (list of valuable benefits)." You may lose nonzealous customers because they'll be convinced somebody else will serve them better. It'll also strengthen the conviction of the competitor's customer because somebody else (your former customer) reaffirmed the wisdom of buying from that competitor.

Too many business owners say they want word-of-mouth, but they don't know much about it. Some call it word-of-mouth advertising or word-of-mouth marketing. But, except for the current practice/malpractice of paying others to do it, word-of-mouth isn't advertising or marketing.

NOTE- Paying somebody to spread the news about your business is a legitimate practice as long as s/he discloses the paid relationship. A small gift isn't what I consider to be a payment. A finder's/affiliate fee is a payment that should be disclosed. It's malpractice when somebody depends on converting others for income & it's not disclosed.

It's a malpractice when somebody refers others who don't fit a business's market niche & still gets paid.

Advertising or marketing are things a business pays for, so it can & should be controlled, tested & improved. Referral marketing is NOT word-of-mouth. Unfortunately I don't have space here to give a full education about referral marketing.

I plan to continue this discussion thread later. Please submit your comments, insights & questions.

Thank you for using my blog. Please let me know if I should clarify anything.

Copyright 2008 Dennis S. Vogel All rights reserved.
When you compete against big businesses with big budgets you need powerful marketing strategies & tactics. You'll find them here-
https://thriving-small-businesses.blogspot.com/
http://www.voy.com/31049/

Subject: Avoid Financial Problems like Recessions

What I've written in this post may seem like teases - just enough information to get you interested in doing some things - buying products & services. I won't deny that aspect in what I've written. I also want to encourage you to not give up or only try to maintain your status quo. Your status quo will probably get worse if you don't proactively make it better.

There are probably a few solutions for each of your marketing problems. Each problem could be solved by a range of solutions, which would vary in effectiveness & efficiency depending on the problem severity & distinct differences.

Some "solutions" may be "proven methods" from specific case studies. I cringe & laugh when I hear & read about "proven methods". Why?

Example: It's been proven by a retailer, it's less expensive & more efficient to own trucks & pick up products directly from factories or shipping piers, then haul those products to stores. Relying on trucking companies costs more money & causes problems from lack of control.

NOTE: It's been proven by Wal-Mart. If a small retailer does it, it'd be more expensive & less efficient. So, please be careful about using proven methods. There are many variables involved, which aren't always described - or even considered - in most case studies.

There's an art & science in determining which methods to use without changes, which to adapt & which to avoid.

I don't have space to fully define & describe what I'm introducing. Some of it is complex because there are unique variables in each situation. To cover each possible nuance would require a long book. I doubt most of you would read all of it even if I wrote it.

I want you to realize there are solutions, so please don't give up.

It may seem like I'm trying to blow your mind, but I'm not. If I were trying to blow your mind, I could add more variables for you to consider. You probably don't have enough time to run your business, serve clients & figure all of this stuff out. I'm just giving you an overview of what should happen. You can probably have marketing consultant figure it out for you & be paid a percentage of the sales revenue. Otherwise, if you can afford to pay an employee, s/he could do it for you.

You may be pleasantly surprised to find you probably can afford to hire a marketing consultant. Considering economic fluctuations & growth of big competitors, you probably can't afford to not have a marketing consultant.

Much of this is universal, but since I specialize in small retailers, I'm mostly focusing on retailing. Oops, I almost broke the surprise by revealing I'm a (you probably realize it already)

It's common to make a discount offer for 1st time customers/clients to lower the mental & financial barriers to buying. It's a legitimate method, but there are some drawbacks.
1a- If you use discounts like this, you need to be sure it's clear you're doing it as a promotion, it's not your regular practice. But unless you explain it well, people may think since you gave them a discount once, you can & will do it again.
1b- People are apt to forget the details; you may end up reminding them why you made a specific offer. There are general reasons, so you don't have to memorize complex reasons.
2- If current customers didn't get a discount on their 1st transaction with you, it'll seem unfair to give it to others.

Some businesses also give discounts to reactivate customers. Its legitimate, but then why wouldn't customers stop buying, just so they can get a reactivation discount again? If they don't need what you offer every month, they can afford to wait & may feel they're better off if they wait.

You should do your best to limit optional products & services to 50% or less of what you offer. If you only offer luxury items, offer products & services people need to preserve their investments. Market these as necessities so you & those who buy from you get the highest sustained benefits. Remind them - it doesn't make sense to let their luxury items deteriorate.

As Jay Abraham advises - treat those who buy from you as clients because clients are under your care & protection. My corollary is--Customers may buy from you occasionally. Clients have professional/business relationships with you because they know you care about them.

When you know who wants & needs specific products/services & why, you'll have a strong basis for making offers.

It's better for you to keep clients buying. Hopefully, it's more important for clients to keep buying from you. By correctly using database marketing, you can avoid the need for reactivation offers.

You could probably buy or share an inexpensive used computer with a basic (inexpensive, easy to learn & use) database or mailing list program.

There may be secretaries who've been laid off or who quit to care for young, disabled &/or elderly family members who could maintain your customer database. As long as the work is done on time & the right way, it shouldn't matter what time of day a person does it. Ask a lawyer about laws covering independent contractors. You could make it possible for an independent contractor to survive financially & care for loved ones too. S/he could also type & make copies of your letters, post cards or flyers.

You need to consistently offer & provide values people will want & hopefully often need. You probably can't afford to keep selling based on low prices, unless you can sell a high volume or get money for introducing offers from other businesses to your clients. There are ways to set up arrangements like this so your costs are low & your profits are high.

Some business owners get more profit by introducing their clientele to other businesses than they do by selling products & services. This is called Host Beneficiary Relationship Marketing.

There are also ways in some businesses to offer lower prices in exchange for more value from clients.
1- You can reduce a price when a client refers somebody else who buys from you. (Be careful about the "referred" person returning what s/he purchased for a refund. S/he may've just bought from you, so the prior referring client could get a discount.)
2a- You can have clients buy in bigger volume, even if they get others who share the lower price & value. Example- You could price product A at $2 for 1. If a customer or group buys 50, you may charge $1.50 for each.
2b- You may wonder how you could afford to do this. If a supplier of product A will give you a volume discount, you can still get a profit while selling product A for a lower price.

Maybe you were going to order 100, which would wholesale for $1 each. If 2 groups of clients buy 50 (per group), you could order 200 & maybe get each for 75 cents at wholesale. This way you get price shy people to buy, when otherwise they wouldn't have. Plus you get more profit from each individual $2 sale because the volume wholesale price was lower. Plus if you sell the product in boxed lots, you won't have the stocking or displaying labor costs.

The volume transactions should be faster & cheaper because 50 products are sold at once, instead of individually. You'll be serving & satisfying more clients in less time.

If you have these clients (who preorder) also prepay or at least make a deposit, you may be able to pay the supplier in full when you order. Then you won't have a finance charge to pay & the supplier may give a discount for paying upfront.

So, if you'll offer new clients a 1st time discount or offer reactivated clients a discount, you can preserve your price credibility by having them preorder or buy before a date so you can make bigger orders & get volume discounts &/or reduce the other costs I wrote above.

There are more ways to preserve your price credibility, but I won't go into them now. This article is getting to be too long already. Please remember, what price credibility means. If people think you'll lower your prices eventually, they'll wait to buy at lower prices. It means you have little or no price credibility. Price credibility means you know how valuable your products/services are & how much money you need to stay in business. So, you won't keep lowering prices to get more sales, unless something else (positive) happens.

I plan to continue this discussion thread later. Please submit your comments, insights & questions.

Thank you for using my blog.

Copyright 2008 Dennis S. Vogel All rights reserved.
When you compete against big businesses with big budgets you need powerful marketing strategies & tactics. You'll find them here-
https://thriving-small-businesses.blogspot.com/
http://www.voy.com/31049/

Subject: Re: Avoid Financial Problems like Recessions
In reply to: Dennis S. Vogel 's message, "Avoid Financial Problems like Recessions"

It seems you try to imply if we hire you, we won't have a recession. I didn't see anything in what you wrote to prove you can prevent recessions. Are you omnipotent & omniscient or are you just running for president?

Subject: Avoid Financial Problems like Recessions
In reply to: "Re: Avoid Financial Problems like Recessions"

Thank you for your request for me to clarify what I wrote.

I can't prevent recessions because it would interfere with my dictum of free will. People decide whether to purchase things. No politician - in a democracy - will change that.

(My explanation below seems to ramble, but I'll tie in it with what I wrote in other posts & the concern you seemed to express.)

I can help retailers determine the values/solutions a market niche wants. In this case, "value" means something people willingly pay for & "determine" has 2 meanings - decide & discover. Since people have general or specific ideas about what's missing in their lives, I can help retailers match what suppliers make available & solutions people need/want. Since people don't always know what they want until it's presented to them, I can help retailers decide what to present.

I'll use an old situation as an analogy, but 1st some background. Among things Clayton M. Christensen wrote are these ideas- 1- Inventors/innovators & consumers don't always know how a product will be used until consumers have enough experience with the product. 2- Products often don't work optimally until they've been perfected.
A related concept & circular logic: People may not realize how to get the best value from a product until it's fully optimized, but how can it be fully optimized until people express how they need it to work - what they need it to do?

These imply products won't work optimally until people have used them enough to discover what's good & bad about the products. After they know the pros & cons, they can give feedback & inventors/innovators can adapt products based on what people like & dislike & what they use & don't use.

Using formal marketing research (if we could afford it), we could get some idea what people think they need/want. Sometimes this is too nebulous to be practical. If a product concept hasn't even been developed yet, how can people answer questions about it. If a product concept has been developed - but not finalized & patented - an inventor may not want any specifications revealed. So, there may be still be little we can tell people before asking for their feedback.

When cars were invented, many people didn't want them. Some were afraid, others were frustrated by the lack of performance & defects. Many were skeptical & preferred horses.

After early adopters bought cars, there were still some problems (people were injured & there were performance problems) & almost no economy of scale. Cars didn't work well & were relatively expensive (compared to the current "technology"). Many people already had horses & some had wagons &/or buggies. Buying a car meant abandoning what they already paid for, then paying more money for something with similar benefits.

To justify buying a substitute for something they already own & know how to use, how much better would the benefits have to be?

It was embarrassing because of the social visibility to have car problems when horse owners quipped, "Get out & get under (to fix the car problem)." & "Get a horse."

Now we'll segue slowly into modern times & how I can help retailers avoid some financial problems.

Let's presume you were a wooden (horse-drawn) wagon dealer during this transitional period. Would you want to offer cars too? You'd still specialize in transportation. But you may have to find fuel for cars. If you find a reliable source (wholesaler) you could profit from selling the fuel too. You'd probably have to learn how to repair & maintain cars or hire somebody who knows how to do those. But these services could be profitable too, but only after the product is profitable.

Hindsight Is 20/20 Warning: Sometimes when a major technology is being displaced by another, there can be a recession. Sales of the old technology decrease, but sales of the new technology are slow. Recessions happen when people & businesses don't buy much stuff - like in transitions like these in 2008.

Recessions can be regional, national or international. Recessions affect some business categories more than others

Could this be happening now? In the USA, we're still transitioning from an manufacturing economy to service dominance. Technology change is definitely part of the problem. Another problem is baby boomers are retiring & younger workers are being trained. This messes up production & people are changing their purchasing patterns. Their needs & incomes are changing.

Employee recruiting & training are expensive - no matter which country employers are in. Research & Development - innovation - are difficult when some R&D people are retiring & others haven't been educated or trained. Plus, money used for employee recruiting & training isn't available to invest in R&D.

When new "innovative" products aren't available, there's not much reason to buy products. The old products still work.

Plus, what's making our economy a lot worse is -- Wal-Mart is increasing offshoring of production. Workers aren't working/employed. They can't afford to buy much, so they try to save money by buying cheaper products. It seems to justify W-M forcing manufacturers to import products (but it isn't justified). It's a vicious circle; each part makes the rest worse.

Hold your horses, we're going back to our analogy. Automotive travel is faster & cars can go further in a day than horses. But most people can't afford to buy cars yet. They're learning the advantages of cars, so they're less apt to invest in new wagons, replacement parts or repairs. (I know selling feed, supplies &/or veterinary care for horses is a possibility. Plus there were many more issues involved in making cars viable & valuable. For the sake of simplicity I'll ignore those.)

Assuming it's about 1920 & you're in a small Western US town - What will you do? Cars sales are too low to bring you enough income. Every product you bring to your lot better be sold quickly. You can't afford to stock products people aren't buying. But demand for wagons is decreasing. Should you try to promote them more & hope to increase sales? Should you opt for more replacement parts & promote repair work (hoping to stave off the need for cars)?

Promoting old technology may waste your money. What you waste on old technology isn't available for new technology.

Here are some assumed facts/problems & possible issues/solutions:
Most people can't afford cars. Should you accept horses & wagons for trade-ins? Then cars may be more affordable. But how much trade-in value do horses & wagons have? Would anybody purchase them?

You may find a bank or wealthy person who will loan you money for a few cars to stock. Banks or wealthy people may loan consumers money to buy cars.

Many people are frustrated with the newly realized limitations of horses & wagons compared to cars, but they don't want imperfect cars. You may be able to work with a horse breeder who may find/develop the best horses for specific situations. But this may be a waste of effort, time & money because it may be too late in the product (horse) life cycle.

People recognize common problems of using cars. You may be able to repair & possibly fabricate cars so they'd work better in specific situations the manufacturer may not know about.

Fabrication to adapt cars for local consumers is innovation as opposed to invention. Each innovation may increase a product's value, but it may increase the wholesale cost & retail price. Would enough consumers perceive the value of innovations? (Marketing consultants deal with this issue.) Until the innovations are implemented in finished products, people won't buy them. Producing & stocking new, improved products costs money. If there aren't enough sales, it can contribute to a recession.

You may find a politician who vowed to "clean up this 1 horse town". S/he would be more willing to do it, if there's only 1 horse in town. Hint- There are various sanitation problems when horses are in town.

Possible Ad Headlines: You'll Never Again See People Point, Then Hear Them Yell, "What Horse's Ass Put That There!" Or you may use something with a similar theme. What Has 1 Head, 1 Tail, 4 Legs & Flies - A Horse. - OR - You Don't Have To Put Up With That Crap!

But seriously, I'd help you - a retailer - find potential consumers of products & determine why they'd want products you could buy from wholesalers. I'd help you test various ways to promote the products to find possible demand. Hopefully, we'd get indications of demand so you'd know how many to order. You shouldn't tie up too much storage room & money in unpopular products. Cash flow problems like doom too many retailers. Marketing consultants should help you avoid many cash flow problems.

You'd probably want to order enough products to qualify for volume discounts & prevent out-of-stocks - frustrated customers.

Since economic transitions cause &/or aggravate recessions & recessions aggravate &/or cause/necessitate economic transitions, I'd help you discover which transitions are starting & ending. I'd help you survive & adapt to them, so you & your business can thrive.

Politicians & marketing consultants can influence economic fluctuations, but we can't prevent them. If we can stimulate the flow of money, we can mitigate economic problems. Mostly what we can do is help people & businesses improve their situations so recessions aren't so severe.

Thank you for using my blog.

Copyright 2008 Dennis S. Vogel All rights reserved.
When you compete against big businesses with big budgets you need powerful marketing strategies & tactics. You'll find them here-
https://thriving-small-businesses.blogspot.com/
http://www.voy.com/31049/

Subject: What does it profit a man to sell at a loss?
In reply to: Dennis S. Vogel 's message, "How well do current marketing options work for your business?"

>Either way, please let me know if I should clarify this.
>You may seem to lose a bit of money on the front end
>(the 1st transaction) but you can gain more profit on
>the back end (in the later transactions). If you
>invest $50 to gain a client who invests $2,000 in what
>you offer (whether it's in the next transaction or
>multiple transactions) you have an inexpensive lead.
A client who only invests $2,000 in what I offer? $50 is still an expensive lead no matter how big the transaction is**IF I don't get a PROFIT!!
Sometimes I have a choice of giving into a customer & I sell at cost or barely above because I need to sell products or keep paying for inventory loans.
People know I have to finance my inventory orders. Some use it as a weapon against me.
Now it's the only way I can sell some things. They don't care about my other costs--labor, taxes, maintenance, charity donations, etc.
There are people & businesses who regularly publish wholesale prices, & advise people what ot pay without even considering costs of doing business.
Now you claim paying $50 to get a sale is worthwhile. It's not only falsely advising business owners. It gives consumers the wrong ideas.
As my costs go up, people's price ideas are the same. I realize they're concerned about themselves more than me but helping me stay in business can help them too. Who else will offer what they want if they gouge me & every competitor?
They accuse me of price gouging. They gouge ME!!! Give me a break already

Subject: Profit From Selling More Things & Lower Your Risk
In reply to: "What does it profit a man to sell at a loss?"

Thank you for giving me a chance to clarify what I wrote & didn't write.

Since you included my request in this quoted text -
>Either way, please let me know if I should clarify this.
I hope you're giving me a chance to expand on what I wrote & not just giving up on me.

I realize I didn't complete every idea I wrote. Sometimes I write too much, other times I don't write enough.
I apologize if I spread inaccurate information. I wasn't thinking of big-ticket product/ services when I wrote the part that frustrates you.

There's a difference between prices people or firms pay & gross margins, gross profits & net profits.

The current credit crisis is hitting sellers in at least 2 ways - They pay more to finance their inventories & it's harder for buyers to qualify for loans. Even if buyers qualify, they may opt not to buy now because the finance charges would increase the payments - monthly & total.

I know what I wrote below can be interpreted as negative or insulting. I don't mean it as a criticism; it's a warning of what can happen for the duration of the bad economy.
A problem for any used product dealers is apt to be some of their inventory is behind the fashion curve. They get what consumers don't want or can't afford anymore. These products are probably one or more trends/fads behind.

When people want to save money on fuel or be environmentally responsible, they sell what they have & buy new (or newer but used) products, which are apt to be closer to what's in fashion.

For vehicles, those that are traded in usually don't fit what consumers currently prefer. When people traded in smaller vehicles because they wanted/needed more capacity, demand for smaller vehicles was smaller. But what used vehicle dealers were able to get was small vehicles.

Now people want smaller vehicles with fuel-efficient engines, so used vehicle dealers are able to get many big inefficient vehicles, while new vehicle dealers have access to smaller fuel-efficient vehicles.
Small used vehicles aren't apt to be as fuel-efficient as new cars.

Those vehicles (new & used) are collateral for vehicle loans. But the demand & market value for undesirable used vehicles may be too low to be worth the risk financial institutions bear. They increase the finance charges for "risky" loans, which means it's harder to get a loan because the payments are higher. The credit crunch aggravates these problems for dealers & consumers.

Dealers, who have service departments, have another source of income. Many dealers are sales people with limited mechanical training & they don't employ mechanics. They don't have income from repair service. They may have a hard time finding vehicles people want & can afford to buy.

A used car dealer I know bought some scooters (like small motorcycles). Selling scooters helps him bridge the sales gap until he can get some used fuel-efficient cars.

Used Sport Utility Vehicles are relatively cheap now, but they're expensive to use. For somebody who commutes short distances, the cost of fuel may not be so bad. But many short trips can be hard on engines. They may require more maintenance & repair which can be an opportunity for some business owners, but only if the SUV owners can afford & will buy the products/services.

A used car dealer who doesn't have any repair/maintenance equipment may be able to make arrangements with a mechanic/garage owner who doesn't sell cars & doesn't have space for many cars.

Some mechanics are frustrated because they need to fix vehicles quickly, but they have frequent phone calls. If a car dealer's business is slow, s/he may be able to help a mechanic with phone duties, setting appointments & providing loaner vehicles.

Phone calls can be forwarded to another phone line or cell phone, so a person handling phone duties doesn't have to be in the same building. But communication between the people in different buildings is vital.

Some people own mobile service equipment, they may welcome a chance to work in a corner of a car lot. Expenses & income can be split.

Price Sensitive Buyers
Sometimes, people are more price sensitive when buying some products, but they'll pay extra for others. It depends on the overall price, how much they think the product/service is worth, how much they value the benefits, among other things.

Are there products or services - maybe a service plan - you can offer & which people are willing to buy? If these products or services don't require much of an investment from you, you may get more profit without having to borrow money.

Thank you for using my blog.

Copyright 2008 Dennis S. Vogel All rights reserved.
When you compete against big businesses with big budgets you need powerful marketing strategies & tactics. You'll find them here-
https://thriving-small-businesses.blogspot.com/
http://www.voy.com/31049/