Marketing is not the same thing as sales. This is what I preach to startup entrepreneurs and business owners who are having trouble making ends meet.
It’s easy to confuse the two initiatives. Business owners think that spending time and money on marketing programs will lead to more customer orders. But the real deal is that chronic over-reliance on marketing to generate new customer activity is more likely to put a young company out of business than on the fast-track to prosperity.
Why do startup entrepreneurs and small business owners spend more on marketing initiatives than sales initiatives? The answer is simple. It’s easier and more fun for business owners to create marketing initiatives than call or meet with prospective customers. Yet, which initiative is more likely to produce a purchase order? The sales initiative!
Think about it. When you connect with a prospective customer, you get to share your enthusiasm and knowledge in a personalized way. Customers get to ask questions or make special requests that can make the business relationship even more satisfying. When customers have confidence that they will get what they want, they place orders.
Here are five ways poorly conceived marketing campaigns make it harder for business owners to achieve their dreams.
1. Saying “yes” too often. Each week, business owners are pressured to spend money by marketing consultants, search engine platforms, media advertising sales reps and perhaps their own employees. As a business owner, it’s easy to say “yes” but much harder to say “no” to persuasive pitches to spend your money.
Who is the best source of guidance on what motivates customers to buy? Your customers. Listen to them. Your purpose as a business owner is to please your customers. Don’t agree to new marketing initiatives just to please a marketing consultant or “get them to stop pestering you.”
2. Overspending on PR. I’ve been told that “any kind of public relations is good public relations.” I don’t agree. Public relations can waste your company’s money. Each day I receive over 100 email solicitations, repeat solicitations and follow-up phone calls from regional and national public relations firms. Many of these press releases are not at all related to what I write about, yet the PR agents keep pressing for coverage. Who pays for these poorly executed initiatives? You do.
The only way PR for small businesses has a chance of being cost-effective is if it is specifically directed to your target customer and about your specific product or service. Don’t pay for broad-based PR initiatives or ego-building campaigns in which you are featured as the star entrepreneur. Instead, align all PR initiatives to your purpose as a business owner—to sell more products or services to your target customers.
3. Building brand awareness. A common proposal to small business owners is to use advertising campaigns to build brand awareness. This tactic may be worthwhile for well-established brands but less so for young companies that have to generate sales to stay in business. It may seem boring but point-of-sale promotions, coupons and other time-sensitive special offers may be the fastest and most productive way to attract new customers to your brand.
4. Drinking the Kool-Aid. The costs of marketing or advertising campaigns are recorded as an expense on your company’s profit and loss statement. It’s funny how often I see marketing proposals peppered with language about the asset and “investment value” of marketing campaigns.
The next time you receive a proposal to spend money on a new marketing initiative, work the numbers to determine exactly how many new customer orders it will take to pay for the campaign. Let your marketing consultant or manager know this number too.
If an initiative doesn’t produce new customer activity, don’t sign up for the initiative again. Stick with the campaigns that really do produce a positive cash-paying customer return on your company’s invested cash! Everything else is just a waste of your company’s time and cash.
5. Hiring the wrong help. It’s easy to be seduced by big name advertising and PR agencies that do award-winning work for well-known companies. Still, the skills and tactics required to take a company from startup to $1 million in sales is far different than the skills and tactics required to drive repeat business in a more stable $500 million to $1 billion revenue company. Match your company’s needs to the expertise and experience of marketing advisors and managers.
No one is going to watch over your company’s cash better than you. Trust your better judgment and ability to select marketing campaigns that bring cash back to your company from happy customers. You can do it!
Susan Schreter is a veteran of the venture finance community and entrepreneurship educator. She is the author of the comprehensive new book, Start On Purpose which provides specific action steps to start a new business, attract investors, and make any new business idea bigger, better and more lucrative. Follow Susan @takecommand