This Pillar may not be what you expect.

Promoting (Marketing) your business (telling the world why they should deal with you) is far more that the basics of a nice logo and slick website….it is very much about how you deliver your total offer to your target market and customers.

The Promotion of your business is a detailed and complex process which requires an understanding of the numbers that should drive everything in which you engage in this area.

What we discuss in Pillar Seven:

  • What is Marketing
  • Purpose of a Business
  • Marketing and Promotion
  •  Advertising
  • Social Media
  • Cost to Acquire
  • Life Time Value
  • Conversion Rate
  • Point of Difference
  •  Guarantee
  •  Networking

What is Marketing

Marketing in my view is a misunderstood concept. It is often confused with advertising, sales and service when it should be viewed as the combination of all the activities that we use to go to market. Marketing is really about what we do and how we attract, convert, retain and encourage our customers to spend more and spend more often with our business.

Marketing is much more than a nice brand, slick website and glossy brochure. Regardless of what product or service you offer you have a marketing business.

So let’s have a look at a simple concept………….. what is the purpose of a business?

The purpose of a business is to buy (attract) profitable customers. The more profitable customers you attract the more profitable your business.

The purpose of marketing is then to attract, convert, retain and encourage our customers to spend more and spend more often with our business. In other words maximise the return from every opportunity.

For most small and medium businesses, Marketing/Promotion looks a little like this:







In the interest of time and complexity I will not spend time on discussing brand. I’m going to assume that your brand, logo, position statement, etc are acceptable to your target market and reflect the attributes of your business. Branding, while important for small and medium businesses, is not as important as having a very well executed marketing offer that includes effective advertising, great sales initiatives and outstanding service. Plus the ability in your business to understand what response you are getting from the activities you are investing in. As you grow, your brand will certainly become more important.

If the purpose of a business is to buy profitable customers then that is the purpose of marketing.

As a sub-set, the purpose of your sales activity is to convert prospects to customers and the purpose of service is to retain customers and assist them to spend more, more often. Analysis is to understand if this activity is indeed producing a profitable business.

Most businesses want to attract and retain profitable customers and great marketing activity takes your customers on a journey from suspects to prospects. It looks like this:

Suspect –           Someone who exists in your target market

                              Advertising and Promotion turns suspects into prospects

Prospect –      Who you know (have their details) but has not bought from you.

                              Great sales systems collect prospect details and converts prospects to shoppers

Shopper –       Someone who has bought from you once

                             Great sales systems and service converts shoppers to customers

Customer –   Someone who has continued to buy from you

                            Great service and internal promotion converts customers to members

Member –     Someone who considers that they are a valued part of your business

                           Members must be nurtured with consistently outstanding service and offers that will turn them into advocates

Advocate –   Someone who tells others about your business

                          Advocates must be nurtured with consistently outstanding service and offers usually over a long period before they will become Raving Fans

Raving Fan – Someone who attracts more profitable customers to your business – in other words does your selling for you.

                            Raving Fans are retained by you consistently showing that you CARE. They are assisting your business to succeed and prosper.

How many Raving Rans do you have assisting your business? If your business was supported in this way how many Profitable Customers would you have? How much would you save on other advertising and promotion? How much additional profit would you have on the bottom line?

A simple story that demonstrates how to create Raving Fans.

The owner of the new coffee shop across the road from my office was being a little cheeky and asked me for a “free business tip”…………..I gave him four for free.

1) Be friendly always – Make it fun for customers to come in

2) Remember your customers’ names – he immediately asked mine

3) Make great coffee every time – he did, but his team needed training

4)Make the coffee fast – typically people are in a hurry in the morning

He consistently did these things, he then added a loyalty card, followed by the occasional free muffin or toast for regulars, to say thank you to them and get them talking about his business.

Over the next few weeks he told me his business doubled and then doubled again. Eventually he sold the business for what I hope was a very tidy profit. I’m sure he spent nothing on advertising. He developed a very effective marketing process to grow the business.


It used to be very simple to advertise – you just placed an ad in the local paper, used yellow pages, a billboard, maybe theatre advertising or a letter box drop.

Then the internet came along and the world changed. The internet developed further and social media came along and the world changed again and it keeps on changing. But what also has happened is that now you can target your advertising more effectively and even better, it is much more cost effective. If you know what you are doing.

A web developer last week told me that your website home page has 1.5 seconds to attract a woman and 3 seconds to attract a man (you can make your own conclusions on that). So you better know what you are doing if you want the world to see your offer and you don’t want to waste dollars.

The list of web and social media opportunities are growing and seem endless but the basics of a marketing plan remain consistent.

1) Understand your target markets…yes you have more than one and the better you understand each one, the better targeted your marketing efforts will be.

2) Understand the needs of each group in each target market. For example if you are a restaurant you probably have these markets and will need to treat each differently –

Lunch, Dinner – Business groups, Couples, Special Occasions, Fast Diners, Large groups, Families, Romantic, etc.

3) Understand where your customers come from ie which geographical area.

4) Develop an offer that suits each market.

5) Give your target market a “Why” they should support your business. Your USP.

6)Know how to effectively communicate your offer to each market.

7) Track the results from each marketing activity. Test new ideas and measure the results.

Cost to Acquire and Life Time Value

If the purpose of a business is to buy profitable customers, how do you know what you are doing is profitable?

I am typically not surprised when business owners do not know how much they spend on marketing activity and how many customers that spend generated.

It’s usually a very straight forward exercise to find the answer. You should track this activity constantly, knowing these numbers moves your marketing spend from a cost to an investment.

Let’s looks at a couple of straight forward examples of Cost to Acquire.

1) You spend $1000 on an advert in your local newspaper. You track the responses to the advert by simply asking “how did you hear about us”. Ten new customers contact you directly due to the advert, from these ten, five actually bought from you. Therefore you have 5 new customers at a cost of $1000. Your cost to acquire is $200 per customer.

2) Your sale team costs you $100,000 per year. You give the sales team a target of 200 new customers per year. They are supported with other marketing collateral that costs $20,000 per year. Your total spend is therefore $120,000. The combination of your sales team and marketing activity actually produces 240 new leads from which you convert 50% or 120 to become actual customers. Therefore your Cost to Acquire is $1000 per customer.

3) You join a Networking group that costs $1000 per year for membership plus you spend $30 to attend twenty meetings in a year, total $1600. From this activity you find four new customers therefore your cost to acquire is $400 per customer.

Now here is the key…Life Time Value.

You will have tracked your customer spend and know how long you retain customers. Therefore you will have an average across all customers of how much they spend with you per year and typically how many years you retain them as customers. You will also know your Gross Profit %.

As an example for each scenario above:

1)In example 1) above, customers spend $600 per year and typically stay for 2 years. You spent $200 to acquire a customer and will make $1200 over the next two years in revenue at a gross profit of 45% = $540 gross. Your $200 investment in acquiring profitable customers generated $340 over two years or $170 per year. A good deal, better than other forms of interest on an investment.

2) In example 2), customers spend $2000 per year and typically stay for 5 years. You spent $1000 to acquire a customer and will make $10000 over the next five years in revenue at a gross profit of 30% = $3000 gross. Your $1000 investment in acquiring profitable customers generated $3000 over five years or $600 per year.

3) In example 3), customers spend $5000 per year and typically stay for 3 years. You spent $400 to acquire a customer and will make $15000 over the next three  years in revenue at a gross profit of 80% = $12000 gross. Your $400 investment in acquiring profitable customers generated $12000 over five years or $2400 per year. Great return on investment in anyone’s language.

Knowing your Cost to Acquire and Life Time Value numbers allows you to make far better decisions when you are investing in marketing activity. Marketing must be an investment, not a cost.

There is one more key number that you must know in your business Conversion Rate. Not every customer who contacts your business will become a shopper/customer.

Remember your Advertising activity encourages prospects to contact your business, your sales and service activity turns prospects into shoppers/customers and retains them as long as possible.

By tracking the number of Leads that advertising and promotion attracts to your business and then by tracking the number who become shoppers/customers you will know your conversion rate.

Example: Advertising attracts 100 prospects to contact your business. Through sales and service activity 40 buy from you, your conversion rate is therefore 40%. Improving your conversion rate gives you more customers. Simple but sometimes a number that business owners do not track.

Understanding these numbers helps you understand the real drivers of your business. The red numbers are outcome, the black numbers are your levers to business improvement.

This is also discussed in Pillar 3…but it is worth repeating

Look what happens when the levers are improved by just 10%. (Nearest ‘000)

Leads                                                           1000                          1100

Conversion Rate %                               40%                             44% 

Customers                                                400                             484 

Average $ purchase                           $200                           $220

Average times purchase p.a            2                                   2.2 

Sales Revenue                                       $160,000                   $234,000             Plus 46% 

Gross Profit %                                       45%                              49.5%

Gross Profit                                           $72,000                     $116,000               Plus 61%



Your Marketing, Promotional, Advertising, Sales, Service activity is all about –

  • Attracting more leads
  • Improving Conversion Rate
  • Helping Customers spend more $$’s
  • Helping customers spend more often
  • Retaining profitable customers

A word about Gross Profit. Improving and managing your GP is key to a successful business. These GP$$’s are what is left over to pay all expenses and for you to generate Net Profit. Gross Profit can be improved in only three ways:

  • Increasing prices
  • Lowering cost of goods
  • Changing your sales mix to sell more high profit items

Typically a combination of all three is preferable. Protect and improve your gross profit.

I have repeated this section from the Positioning Pillar. A great USP and a Guarantee is critical to the success of any Small and Medium business. It is critical to successful Marketing however it is an area that most Small and Medium business pays little attention. Develop a great USP and Guarantee they will assist your success.

Unique Selling Proposition (USP) and Guarantee

What makes your business different, what makes it stand out from the crowd? If you do not have a clear USP that can be communicated effectively to your target market it will be unclear what your business stands for. You will be lost in the crowd and severely restrict your profitability.

Developing a way to stand out in your market will give you a great advantage and it is never more important than in a market with many competitors.

Unique Selling Proposition (USP) is an area that is often written about but poorly executed in

business. Most USPs are really just table stakes that someone else can match. This is OK as

it can get you out in front, sometimes far enough to stay ahead. Domino’s Pizza did this with

“You get fresh, hot pizza delivered to your door in 30 minutes or less — or it’s free.” And

FedEx with “When your package absolutely, positively has to get there overnight”.

One of the best is from “Bugs” Burger Bug Killers, Inc. They are a US company that puts its

profits on the line with an incredible guarantee to back their uniqueness. They specialise in

pest control for hotels and restaurants and charge up to 10 times what their competitors

charge. Here’s their USP: If they don’t do their job they will pay back:

  • a year’s service fees,
  • the cost of another exterminator for 1 year,
  • the guests’ bills,
  • all fines and
  • any lost profits if you get closed by health authorities.

PLUS $5000!

What are YOU willing to guarantee? What will you hold yourself accountable for when

dealing with your customers?

Advertising Channels

They are endless and more and more options arise every day.

In my view the two critical areas that every Small and Medium Business must fully leverage


A professional effective website that is customer friendly and captures the target market’s

attention fast. Use your website and blog to communicate with your market at every

opportunity. Make your communication timely and relevant, don’t only try to sell. Depending

on your market you may want a transactional site. Always research your options carefully to

find the best web developer, they are not all equally skilled. Take your time and find the right

fit for you and your business.

Next is Networking, get out and meet prospective customers. Regardless of your industry in

the small and medium end of the market, people deal with and refer those people (not

businesses) that they know and like. Join a local networking group, the local Chamber of

Commerce or local community group, support a local charity. In short, get involved.

Professionally leverage the opportunities, try to assist others, be patient and business will

come. Learn how to Network correctly. Recognise that networking is also an investment in

time and $$’s and should produce sales.

Typically multiple marketing streams are preferable to one or two. Your

Marketing/Promotional opportunities include.

  1. Business Cards
  2. Signage
  3. Press advertising
  4. Radio and TV advertising
  5. Direct Mail
  6. Letterbox drops
  7. Face Book
  8. LinkedIn
  9. Other Social Media
  10. Movie advertising
  11. Billboards
  12. Sponsorships
  13. Workshops and Seminars
  14. Uniforms
  15. Word of Mouth promotions
  16. Referral programs
  17. JV’s with similar businesses
  18. Host Beneficiary
  19. In store promotion
  20. Brochures and Flyers
  21. Party plans
  22. Sales incentives/commissions
  23. Customer Loyalty programs
  24. Free consultations
  25. Discount offers
  26. Etc., Etc., Etc.

Regardless of the strategy you use, Testing and Measuring plus understanding the numbers and results are the key to making your Marketing and promotional activity an investment as opposed to a costly expense.

Testing and Measuring

The term “testing and measuring” is a practice that forms an essential part of understanding your business.

Many businesses persist in embarking on expensive marketing campaigns with little or no idea of the outcome. These same businesses will spend thousands of dollars on an ad campaign and hope they get a response.

There is little point in spending $$’s unless there is some opportunity to make more $$’s. When conducting a test it must be followed with an analysis of the results. Imagine taking that new car out for a test drive and not paying any heed whatsoever to the quality of the ride, the noise levels and the engine performance. Not reasonable…is it? You would instantly compare this new car to your old one or other new cars you were considering…wouldn’t you? You would have your own form of measurement to compare the car with others. Your taste is a form of measurement when you try those samples in the supermarket. If you lost your ability to taste…why bother trying the sample at all? I believe you get my point!

Now, back to our business analogy…there is no point in testing the outcome of any type of marketing campaign with no measurement of the outcome. Careful measurement and analysis of the results of a test campaign will provide much needed information on which to base decisions. The results of the measurement will quantify the success of the test campaign. The results can then be extrapolated to test the soundness of the campaign.

My final point. Discounting. In many Small and Medium Businesses at the first sign of a downturn the reaction is to reduce

the price.

This is sometimes the one and only Marketing and Promotional strategy.

Now please don’t think that Discounting is not a strategy. It is great for making new friends (customers) who will pay full price later, clearing dead stock usually requires discount action, discounting may be necessary to meeting competition, etc.

The catch is that rarely when you discount will you increase sales to a high enough level to generate the same level of gross profit $$’s. Therefore you will have less $$’s to pay your fixed expenses and generate a net profit.

When you decide to discount please do your numbers and know what the outcome is likely to be:

Did you know that if you reduce your prices by 30% and you have Gross Profit Margin of 30% you have to increase your sales by 6 times to generate the same level of GP$$’s

See Brod’s Blog for more information or call me +61407487423

Effective Marketing and Promotion is supported by Testing and Measuring. You should be investing in this part of your business, not just spending. Analysing and understanding the numbers and knowing the levers to sales and profits are the key to Marketing success. Great customer service underpins all your business activities…..on to the next Pillar, Purchasers.

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