Profitable marketing for small businesses involves identifying gaps in the market not covered by mass providers. You must identify a need that can be met profitably, in reasonable volume, where price is not the main criterion for purchase.
Assuming that your business is already up and running, look ahead, say two to three years, and decide how much revenue you will need to generate the profitability you require.
Next, ask yourself if you will achieve those results if your business carries on as it is today, using your current business plan. If the answer is yes, then you might not need to do much more than maintain your course. If the answer is no, then you need a new marketing strategy geared to meeting your objectives.
Start by reviewing your business performance, to establish where you are stronger or weaker than your competitors. Also consider what external factors could impact on your business or on your relationship with customers. These factors could be threats or opportunities. The prime objective of marketing is to make sure your resources are focused on only the best, most accessible business opportunities.
Your strategy is the route map that defines how you will achieve your marketing objectives. Broadly, there are four marketing objectives for most businesses.
Most small businesses do not have the resources to attempt all these objectives at once. You will do better to focus on just one or two of them.
The most appropriate strategy will only emerge as you review your marketing journey. This can be based on three questions: Where are we now? Where do we want to be? What strategy will get us there?
You need to draw up a profile of the needs of your target customers and then decide how best to reach them. A SWOT analysis may help. You should be aiming to pinpoint five major elements.
Plans in your head are little more than a collection or ideas and ambitions. Written down, they become an organised, measurable commitment. For most of us, committing our plans to paper is the only way to avoid losing sight of what we want to achieve - turning our ideas into proven reality.
The degree of formality needed will depend on the size and complexity of the business. Small companies can cover what they need on just a few sheets of paper.
Preferably you should make some kind of regular check on general progress at least monthly. As long as the ongoing signs are good then a more in-depth review can take place bi-annually. If, however, your marketing activity is primed for short bursts you should monitor the outcome of each burst immediately and adjust your bigger picture plan if necessary.
Plan two or three years ahead in very broad outline, but plot the next year in more detail. This way, the short-term plan will always lead towards the longer-term aims.
Try to stick to your plan but be prepared to be flexible in changing circumstances - a key customer going bust for example.
Business-to-business marketing should be simpler, as companies can easily be identified. There are many ways of tracking them down and the people who work in them also have job titles that describe what they do. Consumer marketing is generally mass marketing, which means you are in competition with supermarkets, DIY stores and national brand names with overwhelming advertising budgets
Business marketing can be more direct and focused. Volumes should be greater, which should mean fewer distribution problems. Margins may be smaller (because of trade discounts), but volume will be going to fewer outlets (fewer sales ledger problems). Small firms should concentrate on heavy users. Credit is usually expected, which can eat into your capital and cashflow - engineering firms, for example, may take 90 days to pay. Look at factoring your debts.
Products are more tangible than services. They can be stored until they are required and can be made to an exact and reproducible specification. Even so, the marketing process remains the same in as much as the service must be matched to the needs and preferences of the potential buyer. As services are likely to involve more personal acquaintances than boxed products, rapport automatically becomes a more important part of the transaction.
Sales forecasting is not an exact science, but it is much easier for established businesses that can base their estimates on last year's figures. Start-ups should beware of basing their plans on sales forecasts that are too ambitious - what is irresistible to you, may meet with indifference in the market. Companies House can provide you with copies of the accounts filed by the competition - but only, of course, limited companies. If it is possible to measure against a market leader, expecting to grab any more than 5% would probably be ambitious in the first year. It helps to work out your breakeven point, to encourage and focus your efforts.
For most businesses, 80% of the most profitable sales come from 20% of the customers. Track what is happening with these key customers to safeguard the most important chunk of your business.
It is important to monitor the number of new contacts made each week and to check how many of these result in a sale. Without new contacts in the pipeline, sales will dry up. Be alert for mistakes - the stage at which the sales process breaks down will give a valuable insight into possible areas for improvement. Similarly there will be a point in your sales pitch where you get the buyers agreement. Learn from both the positive and negative experiences. Also, keep track of your experiences in a way that enables measurement and will permit retrospective analysis.
In addition to checking your activities you should also measure the effectiveness of your marketing efforts. Apart from helping to separate what works from what doesn't, these measurements will help you sift the actual value of your efforts.
Monitor all new enquiries by coding advertisements and coupons, getting respondents to ask for a certain person or inserting codes into the address. Phone enquirers should always be asked "By the way, how did you come to hear about us?" Visitors to e-commerce websites can be tracked by page visits and even by how long they spend on each page.
Planning is everything - yet it is also the most frequently ignored element on the part of would-be entrepreneurs. Planning your marketing is a logical and practical process, which can and should be measured and, if necessary, adjusted. Use Market, Consumer and SWOT analysis to provide the background facts which will shape your plan.
Those businesses that get it wrong tend to be those who either don't plan or whose plan is based on hunches or unverified information. Guesswork is completely free - but completely unreliable. The only sensible way to move forward is to know in advance where you are headed.