What is the best way for a start-up to cope with the high cost of marketing?
Internet has taken over a larger populace of the customer acquisition process. For a start-up less than 22 months with lover financial capacity, how can you cope with the high cost and be sustained till break-even stage? Are there methods to make sure you're getting the most out of your marketing efforts?
The high cost of marketing in relation to what? Every business needs to figure start up costs in which marketing should be included, and if you are marketing correctly for your business it should be an investment in your business not just a high expense.
To help reduce your marketing expense:
Don't waste your marketing budget on marketing which isn't right for your business. To often businesses buy marketing which sounds like a good deal, but isn't right for their business, making it a waste of money.
You need to understand, exactly, who your target market(s) is so you can target your target market.
Determine how to best reach your target market and set up a marketing plan which only uses the best marketing strategies for your business.
Shop for the marketing services in your marketing plan, there can be large cost differences from one marketing company to another.
Make sure you know what you are getting, and not getting from your marketing company.
Establish realistic goals for your marketing plan which the marketing company has control over...for example, if you want your business to be found on page 1 of online searches, then once it gets there you have met your goal. If you want to increase sales by 20% next month...keep in mind you control sales, not a marketing company.
As Derek touched on, it's important to understand the value of marketing. You can do this by figuring out the life time value of a customer...what will your average customer spend initially and how often will they do future business with you. If the lifetime value is $100 then you know how much you can spend to get a customer and still make a nice profit.
Daniel, it's all about your business model. Key to marketing performance is understanding your cost per acquisition and determining if you can live with it. It's hard to scale without resources, but sometimes there are creative answers if you're wiling to take a more organic/grassroots approach. As for making sure the marketing you're doing is optimized, there are lots of remedies, but it helps to know the symptoms first.
The other answer is: maybe marketing isn't expensive if you can fully determine the value it's providing.
The best news is - social media marketing is free! So, definitely make sure you are taking advantage of your presence there. Also, you can use a free mailing client like MailChimp to start building your list. (you can also upgrade to $10/mo. if you need auto responders, affordable for anyone!)
Unfortunately you have to pay to play when it comes to Internet marketing. I would identify strengths within your existing team to see if any team members can help. Sometimes you don't know until you ask. You could have a social media superstar or a rockstar writer within reach. Pick the areas that make most sense when it comes to visibility and track down an individual or vendor to help with key areas you have no resource for.
In times when you don't have the cash to buy advertising, you need to invest the resources you have, which is usually your time. You need to get your feet on the ground and network. For a business such as a travel agency, your engine of growth is typically going to based on happy customers spreading the word for you. Make sure you have materials ready for them to make it easy to do so and give them incentives for doing it.
One of the benefits of embracing content and social media marketing is that it does reduce marketing costs. What's needed is time to build a following, learning how to properly use the free tools and the social networks and some sweat equity.
Each profile on the social networks is a free billboard! I tell my clients to do what I say for 3-6 months, then see where you are with metrics, insights and analytics and then plan to advertise in the networks where you have the most engagement.
You need to set goals and objectives, then write out your strategies and then a tactical plan for execution. Once a month, check your analytics and adjust your plan accordingly.
Here's a video that explains how it all works together:
What is Inbound Marketing: http://youtu.be/5qoHtUVLhjc
Here's an article I wrote for Greater Phoenix SCORE on the steps in social media marketing:
AZ Social Media Wiz
You can do it all for free, it takes a little research, but it is worth it in the beginning ! Once you begin to make money, you can upgrade to Pro on marketing sites.
Focus on strategies to provide better service. How can you give your customer more than they ever expected? Make them feel so appreciated that they can't help but talk to their friends about their experience and your service.
Every successful company I've studied, advised, or read about–– and every explosive enterprise you look up–– will have focused so much on the customer, their needs, and service, that customer acquisition becomes cheaper. Southwest Airlines doesn't need to pay to acquire me. I'll fly with them any time I can. Not $1 marketing dollar has made the significant difference to acquire me. Rather, the testimonials of my friends and my own corroborating experience has sold me that I should fly with no one else if I want that quality.
Someone could say the same about Jet Blue or American Airlines –– but only if they had that experience. Be the best. It'll be cheaper in the long run.
I'm sure you've also considered affiliate marketing alternatives and strategic partnerships.
Make sure your team is properly tracking where most of your customers are coming from. Add fuel where you're hot & cut where you're not. But you're probably already doing that.
Uncompromisingly exceptional customer service is key. People will flock to you when your brand/your company makes them feel special.
I don't want to sound like an advertisement, but this particular dilemma is one that I have researched and put together material. In general, the focus is on NO COST ways to increase sales and profit. There is an amazingly large number of things you can do, some of which have been mentioned by others here.
I have a single page pdf (cheat sheet) listing the top 10 methodologies, I have a video mini-series on the topic, and in fact I am putting on a webinar tonight (Tuesday 9/23 7pm US EDT). On the latter, you can still join at: http://bit.ly/1rOxy4Q, although would be quite late your time. ALL of these are free, and are very powerful (if I do say so myself).
If you are asking for yourself, I am happy to provide any and all of this material. Here is the link to the 'cheat sheet' of the top 10, which automatically signs you up for the video mini-series. https://db.tt/jJaYmob0 I hope you get great value from it.
That's a great question Daniel. I think you're on the right track to make sure that every dollar spent goes toward a positive return on investment. Without knowing your business, what type of customers you're attracting and what kind of product you are selling I would suggest starting small several advertising partners and track the success of each to measure its effectiveness. Second, look to use your advertising partners to your advantage, make them earn your business and see if they will be able to give you a free trial or anything to try out their service.
Lastly, once you do get customers in the door, maximizing these relationships could be a great way to help improve your cash flow. If you're able to cross sell to existing customers or gain referrals from existing customers this is a great way to get additional sales with no additional cost of marketing.
I'm sure soon enough you'll be cash positive and this will no longer be an issue for you! ; ) Best of luck my friend!
Daniel, a great question that throws up many different avenues to explore. I concur with all the previous comments - social media is key!
However, there are other elements to your marketing strategy that may require consideration:
1. Internet strategy. What is your marketing strategy regarding your website? Is it about driving prospects to your site where they will purchase, or is it about brand awareness and driving customers to you in the physical world? This strategy needs to be clear and consistently applied across your marketing effort.
2. You can reach a niche. Is your marketing scattered or is it targeted? Many businesses make the mistake of trying to reach out to everyone. That takes lots of money! Rather, newly established businesses make their capital go further if they focus on a niche market that is an inch wide and a mile deep. Determine your niche. Figure out where your niche like to go (physically and on social media) and focus your marketing attention there.
3. Shoe leather. Have you thought about direct marketing techniques? Blogs, email, phone calls, door knocking? Determine the appropriate strategy for your niche.
4. Business plan. Battles are won through planning and great execution. Unfortunately, many businesses fail because they lack a business plan. Based on your comments to previous responses I'd suggest you would greatly benefit from spending a couple of hours reviewing your business plan and assessing what you have learned since it was drafted. If you haven't got a plan, I'd suggest that a couple of days spent drafting a high level business plan would be very worthwhile as it will give you the opportunity to think about your situation strategically and objectively.
Seems you need to learn ROI. What ever the cost to you to produce for your client plus at least 10% but this margin could be what ever the market will bear. The more value you add the more you can charge.
Generally people waste fund due to unplanned marketing strategy.. I have generally seen, most of the fund spend on Market and little is left from acquiring Sales benefits.
It is also found that there are buyers but no stock or sales or after sales services..
So, I think you need to look in these aspects also.
First off, there's a concern if marketing wasn't part of the business plan and tactics in that plan weren't researched. However, marketing is so general that there are many avenues that don't cost money. Public Relations, events, trade associations, trade journal subscriptions, social media, website, SEO, chambers, cold calling from prospect list. The lists go on.
And there is no coping when it comes to investing in your business. Acquisition costs, loyalty margin for the lifetime of a customer and ongoing image advertising, if needed.
Whatever the marketing should be, it should be budgeted as a percentage of overall sales. Trade journals or associations can help you find that grade.
Hi Daniel, I agreed with Derek Cheng, optimisation is always very important but you need to use innovation together to bring your business at new level degree.
Partnering with some unrelated but complimentary strategic alliances to yours, is a great way to achieve more products and services to your company at no costs to you, where your companies can promote your audiences more value.
You also can use Affiliate Marketing that help you to promote and advertising your products or services for a percentage few that are paid just after they perform with their services.
You also can design a front-end product with educational valuable information to your target audience about your service and engage a great relationship with them using email marketing, so you can strategically sell your audience with one-time-offers, up-sells, down-sells and cross-sells promotional approaches.
If you have a higher ticket, maybe you can divide that ticket by offer to your target audience more solutions instead of just one.
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