Most businesses have no idea what it takes to get just one customer. They are so busy trying to include their marketing budget into a percentage of their sales, that during a recession they cut their ad budget. This is a huge mistake.

The very principle to continue advertising at their current level, they will eventually get their customers. But, how well do they know what one customer is worth? Calculating your customer’s worth is basically done by taking the average sale number, your profit per that sale, how much additional profit a customer is worth to you, and determine how many times they come back and buy. You will want to be very conservative when adding this up.

Next, figure out what a customer costs by dividing your marketing budget by the number of customers it produces. If you spend $1,000 on marketing and you get 1000 customers, they are costing you $1 a piece. Prospects are the same. Maybe out of that $1,000 you get 10,000 prospects for $.10.

Calculate how many sales you get for so many prospects. The percentage of prospects that actually become customers. This will be your closing ratio. If you get 10,000 prospects and you have 1,000 customers, it’s a 10% closing ratio.

Additionally, the marginal net worth of a customer is figured by subtracting the cost to produce that customer from the profit you expect to earn from them over their lifetime. Your goal should be spending less to get customers through your acquisition cost. However, this method is one way to generate customers in a short term.

The key is to try and do business for free on a front end sale where you will be attracting new customers. This will ultimately be the driving force to cut back back and reduce how much it cost you to get them. Every business right now wants as many new customers as they can get, but noody really knows how much a customer is worth. So, they end up NOT knowing how much they can spend to get one.

Continue reading...

As tough economic conditions have caused general advertising revenue across the board to diminish, newspapers across the nation are closing their doors entirely. Some are willing to take a chance of converting over to the Internet in hopes of keeping the local news in front of their loyal subscribers. Others who are currently using the Web to generate ad revenue have already experienced low volume ad sales.

The thing is, a local newspaper that once filled neighborhoods with the community news in print is NOT going to reach that same audience with the Internet. Why? Not everybody has the Internet that reads the newspaper. And Not everyone who does will read the online version. In fact, 23.7% of the World still does not have Web access. What’s more, 32% still uses dial-up from their remote or rural location. This makes it difficult to view all of what the media has to offer.

Newspaper owners have NO idea what they are about to face when it comes to Internet advertising. With all due respect to the industry I love, calculating profits and measuring metrics is venturing into unknown territory for most publications. With little or no way to know if online news or ads even reach their target audience, it’s shotgun marketing at its best! The only way to know is to measure it.

Online Advertising Analytics

More Web staff will be needed to help process log files for measuring and analyzing the effectiveness of their web site in terms of customer experience, return on investment, and site effectiveness. They must learn how to collect massive amounts of site visitor and usage data to provide a better customer experience and determine ROI. Employees will have to adjust with greater intelligence regarding how their online publication operates. Everyone will need to know how to execute precision marketing, effective sales, and real-time customer service. This will be extremely important in the current economy when they can’t afford to waste time, resources, or money.

Understanding Data Collection

Various niche publications that choose to place their entire operations online must enforce a niche concept that rests on the importance of customers to its company. They must determine the needs of their customers. Develop their competitive advantages. Select specific markets to serve. Determine how to satisfy those needs and analyze how well they’ve served their customers. Online sales and conversions are not enough. They need to find out who the customers are, what the customers want, where and when they want it. This type of research can also expose problems in the current news service, and find areas for expansion of current services to fill customer demand. This should also encompass identifying trends that may affect sales and profit levels.

Advertiser Experience

Every media kit from every publication is negotiable. One of the best kept secrets in newspaper advertising is how to get better rates than what the publication tell you is available. All will quote you their rate card numbers. And they will offer you a discount if you agree to do multiple runs of the ad. But, what about online ads? Will they be upfront and inform you about the banner impressions you couldn’t track? Or will you ever hear from a visitor who has been bombarded with pop-up display ads? How will they combine news and ads for a pleasurable reading experience without compromising standard business relationships? Clicking Web ads while reading the latest news column weighs heavily on whether the visitor will return to read more.

For once, newspapers hold an edge. While larger publications hire professionals to do their research, smaller ones are close to their customers. They can learn much more quickly the likes and dislikes of their customers and can react quickly to change in customer buying habits. While there is NO safe prediction on where our economy is heading, a decision to go entirely online is seldom a purely rational one. One that can influence your reader’s behavior. As you explore various techniques for presenting your publication online, do not ignore psychological and emotional appeals. It might save your paper!

Continue reading...

Market research doesn’t have to be sophisticated and expensive. While money can be spent to collect research data, there are many inexpensive ways to collect this data that are easily accessible to the small business owner.

Several of these methods are:

Employees

This is one of the best sources of information about customer likes and dislikes. Usually employees work more directly with customers and hear complaints that may not make it to the owner. They are also aware of the items customers request that the business doesn’t offer. They can probably also give a pretty good customer profile from their day-to-day contacts.

Customers

Talk to the customers to get a feel for your clientèle, and ask them where improvements can be made. Encouraging and collecting customer comments and suggestions is an effective form of research. By asking the customers to explain how the product could improve to fill their needs, constructive market research is done, as well as instilling customer confidence in the product.

Competition

Monitoring the competition can be a valuable source of information. Their activities may provide important information about customer demand that were overlooked, and they may be capturing part of the market by offering something unique. Likewise, small business owners can capitalize on unique points of their products that the competition does not offer.

Company records and files

Looking at company records and files can be very informative. Look at sales records, complaints, receipts, or any other records that can show you where your customers live or work or how and what they buy. One small business owner found that addresses on cash receipts allowed the pinpointing of customers in his market area. With this kind of information he/she could cross reference his/her customers’ address and the products they purchased. From this information he/she was able to check the effectiveness of their advertising placement. However, realize that this information represents the past. Present or future trends may mean that past information is too obsolete to be effective.

Your customers’ addresses alone can tell you a lot about them. You can pretty closely guess your customers’ life-style by knowing what the neighborhoods they live in are like. Knowing how they live can give you solid hints on what they can be expected to buy.

In addition, check returned items to see if there is a pattern. Check company files to determine which items sell best, and which sell poorly. Use creative methods to collect information. All market research doesn’t have to be done with numbers and surveys. It can be done with peanuts, as one creative discount merchandiser discovered.

During a three-day promotion the merchant gave away free to customers “…all the roasted peanuts you can eat while shopping our store.” By the end of the promotion the merchant had “litter trails” that provided information on the traffic pattern within the store. Trampled peanut hulls were littering the most heavily traveled store aisles and even heaping up in front of displays of merchandise of special interest to customers.

In short, the merchant learned how they acted in the store and what they wanted and observed their behavior. The key to effective marketing research is neither technique nor data – it’s useful information. Customers likes and dislikes are shifting constantly so this information must be timely. It’s much better to get there on time with a little than too late with a lot.

Continue reading...

If you seek feedback from customers by simply asking, perform a quick and easy survey. Ask them how was everything, but you can be seriously misled.

Most people, even those with legitimate complaints are reluctant to speak out, because they are afraid of appearing foolish. This tendency is probably more widespread in smaller communities, where friendships often stand in the way of critical review.

Also, if your attitude is such that customers feel complaining will not do any good, and you may be antagonizing customers without even knowing it.

One solution is to take a few customers aside and ask them some sincere questions about how your business met their expectations and where it fell short.

If the customer appears uneasy, do not press the issue. You will only force him/her to give you brief answers to escape the situation. If you get a good response, take notes. Follow-up letters thanking the customers and telling them what you plan to do with their suggestions will bring you friends for life.

Continue reading...

Your marketing plan should recognize the various segments of the market for your product or service and indicate how to adjust your product to reach those distinct markets. Instead of marketing a product in one way to everyone, you must recognize that some segments are not only different, but better than others for your product.

This approach can be helpful in penetrating markets that would be too broad and undefined without segmentation. No matter what you are making or selling, take the total market and divide it up like a pie chart. The divisions can be based on various criteria.

Demographics- This is the study of the distribution, density and vital statistics of a population, and includes such characteristics as:

Sex.
Age.
Education.
Geographic location.
Home ownership versus rental.
Marital status.
Size of family unit.
Total income of family unit.
Ethnic or religious background.
Job classification, blue collar versus salaried or professional.

Psychographics- This is the study of how the human characteristics of consumers may have a bearing on their response to products, packaging, advertising and public relations efforts. Behavior may be measured as it involves an interplay among these broad sets of variables:

Predisposition- What is there about a person’s past culture, heredity or upbringing that may influence his or her ability to consider purchasing one new product or service versus another?

Influences- What are the roles of social forces such as education, peer pressure or group acceptance in dictating a person’s consumption patterns?

Product Attributes- What the product is or can be made to represent in the minds of consumers has a significant bearing on whether certain segments will accept the concept. These attributes may be suggested by the marketer or perceived by the customer.

Some typical ways of describing a product include:

1. Price/value perception- Is the item worth the price being asked?

2. Taste- Does it have the right amount of sweetness or lightness?

3. Texture- Does it have the accepted consistency or feel?

4. Quality- What can be said about the quality of the ingredients or lack of artificial ingredients?

5. Benefits- How does the consumer feel after using the product?

6. Trust- Can the consumer rely on this particular brand? What about the reputation of the manufacturer in standing behind the product?

In conclusion- Life Style. Statements consumers make about themselves through conspicuous consumption can be put to good use by research people who read the signals correctly. By studying behavioral variables, such as a person’s use of time, services and products, researchers can identify some common factors that can predict future behavior determining which marketing segment relates directly towards the products or services being sold.

The real key to successful marketing is to identify the market segments you wish to reach and then tabulate the results of your marketing efforts until you find out what works best for you, and then keep repeating your successes.

Continue reading...

Market research doesn’t have to be sophisticated and expensive. While money can be spent to collect research data, there are many inexpensive ways to collect this data that are easily accessible to the small business owner. Several of these methods are:

Employees

This is one of the best sources of information about customer likes and dislikes. Usually employees work more directly with customers and hear complaints that may not make it to the owner. They are also aware of the items customers request that the business doesn’t offer. They can probably also give a pretty good customer profile from their day-to-day contacts.

Customers

Talk to the customers to get a feel for your clientele, and ask them where improvements can be made. Encouraging and collecting customer comments and suggestions is an effective form of research. By asking the customers to explain how the product could improve to fill their needs, constructive market research is done, as well as instilling customer confidence in the product.

Competition

Monitoring the competition can be a valuable source of information. Their activities may provide important information about customer demand that were overlooked, and they may be capturing part of the market by offering something unique. Likewise, small business owners can capitalize on unique points of their products that the competition does not offer.

Company records and files

Looking at company records and files can be very informative. Look at sales records, complaints, receipts, or any other records that can show you where your customers live or work or how and what they buy. One small business owner found that addresses on cash receipts allowed the pinpointing of customers in his market area. With this kind of information he could cross reference his customers’ address and the products they purchased. From this information he was able to check the effectiveness of his advertising placement. However, realize that this information represents the past. Present or future trends may mean that past information is too obsolete to be effective.

Your customers’ addresses alone can tell you a lot about them. You can pretty closely guess your customers’ life-style by knowing what the neighborhoods they live in are like.  Knowing how they live can give you solid hints on what they can be expected to buy.

In addition, check returned items to see if there is a pattern. Check company files to determine which items sell best, and which sell poorly.

Use creative methods to collect information. All market research doesn’t have to be done with numbers and surveys. It can be done with peanuts, as one creative discount merchandiser discovered. During a three-day promotion the merchant gave away free to customers…” all the roasted peanuts you can eat while shopping our store.” By the end of the promotion the merchant had litter trails that provided information on the traffic pattern within the store. Trampled peanut hulls were littering the most heavily traveled store aisles and even heaping up in front of displays of merchandise of special interest to customers. In short, the merchant learned how they acted in the store and what they wanted and observed their behavior.

The key to effective marketing research is neither technique nor data – it’s useful information. Customers likes and dislikes are shifting constantly so this information must be timely. It’s much better to get there on time with a little than too late with a lot.

Continue reading...

Customers like to deal directly with the owner of a business whenever they can. If you can make an effort to be as visible as you can to your customers, this will help, This doesn’t mean your customers necessarily need to see you at your place of business at all times, but only that maybe you need to maintain a presence at your business. You need to be there often enough that customers actually see you from time to time. Or you communicate with them in other ways such as a newsletter.

This is true for product and service-oriented businesses.

It is particularly critical for customers of service businesses who sometimes select your business and remain loyal to a large degree due to the strength of that owner’s word, working style and reputation.

This also goes for online businesses as well. If your web site visitor can see a picture of you located somewhere on your site, this gives them a warm feeling just by seeing who it is they are going to be doing business with.

Continue reading...