How a little bit of foresight, planning and research can save you thousands in marketing and make you tens of thousands in profits!
Did you know that just a couple of hours invested in market research can make the difference between mediocre marketing and marketing that soars?
That’s right! You asked for it and here it is: Market Research 101.
In case you missed out on our recent marketing survey let me fill you in. The number one question from you, our small business owner clients, is “How can I do market research and plan more effective marketing?”
So put on your seat belt because we’re about to take a rocket ride and learn the most basic, the most fundamental, market research methods that any and all business owner should undertake before spending money on promotion. This is the very essence of marketing (as opposed to just promotion) and most definitely the life blood of targeted marketing.
Many Small Businesses Promote Instead of Market…
A quick visit to About.com gives us this up-to-date definition of the word MARKETING: “…the process of interesting potential customers and clients in your products and/or services.
“The key word in this marketing definition is “process”; marketing involves researching, promoting, selling, and distributing your products or services.”
Now when we compare this definition with the definition of Promotion it will become clear why they are not the same action.
The American Heritage Dictionary of the English Language defines PROMOTION as:
1. The act of promoting or the fact of being promoted; advancement. 2. Encouragement of the progress, growth, or acceptance of something; furtherance. 3. Advertising; publicity.
My point is this: many small businesses engage in promotion, but not marketing. That is, they start promoting with ads, or flyers, or posters or word-of-mouth but they never go through the process of marketing. Marketing would include the research and planning of the promotion one will take before starting the promotion. This process of researching and planning is what ensures the success of the promotion that is then undertaken.
There can be no true marketing in the absence of market research and planning.
But it’s not all bad news because you can do the most basic of market research projects using only your business records and an internet connection.
Market Research 101
Basic, Fundamental Market Research You Can Do Right Now
The research starts right in your own office, with the most basic of market research tools: your invoices.
Step 1: Find Out Who Your Most Successful Target Market Is
Dig out as many of your invoices as you can, going as far back as you can. Loosely organize them into the following categories:
Your highest paying customers. Those that paid the largest sums of money with your business in one or more sales.
Your loyal customers. Those that buy regularly so that when you add all their purchases together it comes to a large total. Usually these will also be active in referring other customers.
Your middle range customers. Those that spend or spent some money with you and were relatively easy to deal with.
Your worst customers. The ones who buy the least from your business and use up too much of your time.
Now looking at each group separately find out what they have in common: income, occupation, zip code, neighborhood, marital status, children, age, home value, gender.
Then compare the different categories to each other. What do categories 1-3 have in common? What is different about category 4?
As a result you should be able to isolate one or two or even four target markets that you should focus on for the fastest return on investment.
Before I embark on a new marketing campaign I carefully analyze my past sales to find out which target market I am going to start marketing to. By doing this I can isolate exactly which target audience is the most likely to spend money and give me the best Return On Investment.
Warning: If for any reason you have insufficient information to do this analysis you should immediately take action to obtain the information you need to proceed. There are Data Enhancement Services that will append vital information to your existing lists, even services that will analyze your existing customers to provide detailed demographic reports.
Step 2: Work Out Potential Markets Who May Be Interested In Buying From Your Business
Caution: this step should be done after you have analyzed the data in Step 1. You cannot force an audience to be interested in your business so you need to take an honest look at who may be interested based on experience — not strong hopes or wishes.
The real question is where have you had passing sales success in the past that you have never taken the time to pursue or obtain more business? Maybe this audience requires a longer sales cycle and so you never followed through — an untapped target audience that you are aware exists but that you have not pursued.
Step 3: Find Out How You Can Reach New Potential Customers That Fit The Profile(s)
Now that you spent time figuring who your most likely new customers would be, you need to figure out how to reach them. An effective method could be buying a list of people that meet the criteria. Another would be running a web or online social media campaign that actively seeks these customers out. Another method may be trade shows or exhibitions. Or all of these together could get the result you’re looking for. The best methods(s) will depend on who the target audience is.
RESPONSE! offers free marketing consultations to our clients. Be sure to use this service as we can offer you guidance or advice about how to isolate and target your perfect customer. Consider them your information resource and use them to bounce ideas around and really nail down some strategies.
As an interesting side note: I have clients who go driving around their neighborhoods with a map and mark off specific streets and blocks that they want to target. We then use these demarcated maps to pull targeted lists and execute mailings. I am very impressed by the fantastic results of these super micro-targeted mailings — no one knows your business and customers as well as you do and taking the time to really isolate and understand who you are doing business with, and who you want to do business with, can pay off.
In summary, these three steps will give you the answer of who to promote to.
Step 4: What Are You Most Likely To Sell To Your Most Likely Customer?
Don’t try re-invent the wheel here. Or throw everything you have at the prospective customer (including the kitchen sink). It is time to go back to the invoices and the prospect or lead files and find out what is the most common product or service that new customers either enquire about, or purchase first.
That will give you the answer of what to promote.
Step 5: Work Out The Offer
Ask your sales people, past sales people and analyze your invoices to find out what is your most popular offer AND what your sales team has found to be the most effective buttons or benefits to push in making the prospect interested. If they struggle to remember jog their memories by mentioning specific large and medium sales and ask about what the customer said and what did they say that resulted in the sale. Compare the information to find commonalities.
This will give you your potential offer and what benefits and buttons to use in interesting the potential customer in the offer.
Step 6: Dig Out Past Successful Promotion Pieces (And Unsuccessful Ones, Too!)
Dig out all the promotion you have done: the yellow page ads, the flyers, the letters, everything. Place these into two piles:
- Those promotion pieces that worked.
- And those promotions that did not work.
Analyze what each of these piles have in common. Make notes about the similarities and differences between the two piles. Compare this information to the categories in Step 1. Make sure you have a firm grasp of what worked and what must be included to make it work again.
Step 7: Research The Competition
It’s time to use that internet connection! Search similar businesses to yours. If you service a specific geographic area then research your type of business in your area. If you service a large area than find similar businesses that also service a large area.
Open yellow pages and look at the ads there. Compare different ads to what you found on your Google search. Look at the offers your competitors are making. You can also shop them to find out how they handle new enquiries. What are your competitors charging? Are they providing a similar product? A higher quality one? A lower quality one? Are they more expensive or less?
Make sure you have established exactly how your business fits into this picture. What makes it different or unique? Why should a prospect choose your business and not another? What difference will make to him in price, quality, service?
Step 8: And Now You Are Ready To Plan Your Promotion
Using all of this information you can now plan your campaign. What types of promotion will you employ? Will you use direct mail? Will you need to update your website to showcase your new campaign and offer?
The RESPONSE! team is also more than willing to help you analyze what you have discovered and figure out the most effective campaign based on your findings. Using all the information you have gathered thus far you can now finalize the how.
Caution: You May Need To Do Further Research
As one further note, at this time you may see that need more information. If you have not arrived a fully satisfactory result from the above, and there are still questions with vague or no answers, you may need further research. A professional demographic analysis or possibly a survey project. The cost of these research tools is usually much less than the cost of losing your promotion dollars to ineffective campaign that not only does not get any results, but worse, fails to even teach you anything new about what can get results. So weigh the cost of advertising, postage, printing, etc. against the cost of research. For the want of a simple market research project or list analysis you could waste your marketing investment. A small investment now could save you thousands in the long run!
Please note that the RESPONSE! Marketing Consultants assist in planning campaigns on a daily basis. They have tips from businesses like yours and know what is working and what is not. Their professional consulting time is provided free of charge and they are more than willing to give you their experienced and informed input on your planned campaign.
Finally, our professional and award-winning marketing and design team are also available to do web and design evaluations. They can let you know why a promotion piece or a website may not be working as well as you hoped.
I hope these research tips help you dive in and find the information you are looking for and if you would like know more about this subject, drop me a line with your specific questions and interests.