50% of small businesses fail within 5 years. You’ve heard this stat before. The causes aren’t a secret. Many small businesses are spending too much money acquiring new customers. They break their small business marketing budget because they don’t have a plan.
They aren’t quite sure how to optimize their marketing budget to increase profit margins. They continue to do the same things that just don’t work.
There are 8 things you can do this year to maximize your returns on your marketing investment. Let’s take a look!
Perfect Your Targeting
Are you wasting time and energy running up a hill when business success is just waiting for you in the valley?
Are you guiding your boat against the current when moving 20 feet to the left would allow you to sail with the stream?
As business leaders, we can waste a lot of our small business marketing budget going against the flow.
You may spend excessive time marketing to people who will never buy your product. You feel like you have to convince them that they need what you have.
But just over there, there are people who don’t need much convincing. They’re already in the market for what you’re selling. They’re likely to buy from you.
Sometimes, entering their field of vision is all it takes. On top of that, once you’ve converted these ready-to-buy individuals, they’re easy to keep.
They become your brand ambassadors. They bring in those harder to reach prospects.
It all comes down to targeting to get the most out of your small business marketing budget.
Targeting can cut your customer acquisition costs by 13% while increasing the lifetime value of that customer. If you’re marketing to businesses, it can cut costs even more.
82% of marketers say they get a positive ROI when they target customers.
How to Target
You don’t just target a person. While certain core traits may always be true, people have complex needs that change with time.
This is especially true in their relationship to your company.
For example, a person needs to get to know you before they trust you. They need to trust you before they buy from you.
Modern targeting is about the right person getting the right message at the right time.
Hubspot has a proprietary method that has proven its ability to target effectively. It focuses on creating and distributing content to reach customers at the various stages of the buyer’s journey.
It follows 4 primary stages:
Attract — Increase visibility to attract new customers through content posted on social media and your website.
Convert — Convert the people interacting with you into leads that you can nurture in more segmented and relevant way.
Close — Use personalized content to close that sale with a nurtured lead.
Delight — Delight customers with products and services. They’ll not only buy more. They bring in new customers.
Understanding the buyer’s journey will help you create content that reaches a person exactly where they are. But you still need to know who they are to get the most out of your small business marketing budget.
That means you need to be clear about who your ideal customer is. That’s where well-thought out and written out buyer personas come in.
Have Written Buyer Personas
Buyer personas are also called “customer avatars”. As the term avatar suggests, this should be a realistic representation of an actual customer.
Most small business will have 5-10 distinct buyer personas. Build your marketing strategies and content around these personas. Maximize your returns on your marketing investment.
This allows you to speak to customers on a more personal level about the goals and challenges that lead them to become a customer.
Only when you tap into this more “intimate” side of the customer, can you really influence the buying decision.
How to Create a Buyer Persona
It all starts with data. If you can use real company data to design your personas, always do so. Otherwise, start with market and industry data.
Then refine your personas as you learn more from your own data collection in the form of:
- Customer Management Systems (CMS)
- Website data (collected through Google Analytics and other tools)
- Talking with your salesperson. They’re a wealth of information.
Now that you have data, you can create data-driven buyer personas. Use the information you’ve collected to write out who this person is.
What is their job role? What goals do they have in life? What’s important to them? Give your persona a face and name. Build content and strategies around this person.
Your small business marketing budget will thank you. You’ll be able to do so much more with less waste marketing to the wrong people or in the wrong way.
Actually Set a Budget
Do you have a marketing budget? Or do you just wing it?
Acquisition cost is what it is. You can’t change it. So you don’t bother planning out how much to spend or where to spend it.
Many small business owners don’t set a budget. They are willing to spend “whatever it takes” to get the customer. This is not the way to do it.
One of the top reasons they do this is because they really don’t know what they should be spending. They don’t understand how much they could save by redirecting those dollars.
You’ll end up wasting money on strategies that aren’t working for you. You’ll pay more out than a customer is actually worth to your company.
How to Set a Small Business Marketing Budget
Start with the buyer’s journey that we discussed in the targeting section above. Allot a portion of your budget for each stage. This ensures that you continually move people through the stages.
You can also think of the stages in terms of the relationship that a potential customer has with your business. Hubspot lays it out like this:
Ask yourself some important questions so you can start assigning dollar amounts.
What’s your close rate? How many sales do you need to close each month to meet revenue goals?
Now work backward. How many leads do you need? How many visitors do you need to produce those leads?
If you’re new to the business, you’ll need to start with industry and method rates. Then tweak them as you get more data based on your business.
Consider your long and short-term goals. Are you in growth mode? Are you building a foundation for future growth? Are you edging out a major competitor?
Start getting pricing on the systems you need to put in place to accomplish this.
You might not get it exactly right if this is the first time you create a small business marketing budget.
But you need to start somewhere. Track everything. Make note of where your budget gets misaligned. Continually refine the budget as your goals change.
Know the Profit Value of a Customer
In some arenas where customers are ready to buy now like Yelp, an ad click can cost as much as $50-$70. Is this a great way to spend your money or a rip-off?
It all depends on what the customer is worth to your business over a given period of time. If you don’t know this number, you might scoff at spending $70 for a click that is worth 1000’s to you.
Or you might spend that $70 for a click that just doesn’t make sense for your company.
Determining the profit value of a customer will help you get the most out of your small business marketing budget.
How to Determine the Profit Value of a Customer
Start with your customer personas.
Divide your customers among your personas. By looking at the profit value for a specific persona, you’ll understand how much more or less you can spend to acquire customers in that group.
Within each persona, get an average of:
- First purchase spend (a)
- Customer retention rate (b)
- Spend each time they buy (c)
- How many per week, month or year. Select time frame based on your buying cycle. (d)
- Number of years they stay a customer (e)
- Cost of goods sold, overhead, marketing, other expenses (f)
From here it’s simple math.
(c x d ) – f = customer profit value (CPV)
For predictive purposes, you can use the other factors, trends, etc. But the general equation stays the same.
Take Advantage of Free
As a small business, free absolutely makes your day. It’s how you maximize your small business marketing budget.
You may think you can’t get anything of real value for free. But in today’s marketplace, you absolutely can and should.
There are several reasons that people and businesses offer free stuff.
Some will offer a part of their service for free. Their hope is that you’ll use their free tools and offers. As you grow, you’ll become a paid customer.
This is a great example of content marketing. They’re giving you free content like apps and analytics software. In return, they get increased brand awareness and earn your trust.
That’s smart marketing.
Another reason people give you stuff for free is because they genuinely like your brand. They feel connected and want to support what you do. They also want to grow with you.
Let’s look at some places you can get this free stuff.
Get Free Stuff from Google
Google and Bing will often offer you $100 or more in free ads when you first sign up. There’s an expiration date on this. It’s usually a month.
Don’t miss out on this free money. But don’t just rush to set some ads up.
Take some time to set up a solid ad campaign and start generating leads.
You may also earn ads credits from your campaigns. Use these effectively to generate even more leads.
On top of this, Google offers you some great tools to help track your website’s performance. They come in the form of Google Analytics and Google Search Console.
They’re both free and invaluable for your small business.
Get Free Stuff from Yelp
When you claim your Yelp business profile, they’ll often offer you free money to spend on ads.
These are highly valuable. 90% of consumers say that reviews influence their purchases. 35% of users visit the business within 24 hours of visiting them on Yelp.
Local services is one of the top 3 most reviewed categories on Yelp.
These are high-intention buyers.
Yelp typically gives you 24 hours to redeem your reward. So be ready to act fast. Claim your profile. Fill it out thoroughly. And get ads running.
Get Free Stuff from Moz
Moz is an industry leader in SEO software. Moz and other similar companies have tools every marketer should use to get the most out of their marketing budgets.
Moz offers a keyword planner that far exceeds Google Adwords tool. It gives you keyword traffic, difficulty and top competitors among other useful information.
Chrome Mozbar gives you information about how your website’s authority, links and more.
Moz Site Explorer allows you to look at the websites that are linking to yours.
Get Free Stuff from HootSuite
HootSuite is a social media automation tool. It allows you to research what’s popular for the hashtags you list. Then create and schedule posts out for the week or month. You can set it up to post to up to 3 social media sites at once.
The free version will only let you schedule 20/day.
Get Free Publicity from Influencers
Influencers are people who have a following. Today this following will usually be on social media.
If an influencer’s followers are also your target customers, then something as simple as a tweet from them about your brand could drive sales.
If you approach influencers cold, they may charge you a lot of money. There are more effective ways to use influencer marketing on a small business marketing budget.
- Track mentions. Find out who’s talking about you. If someone with some influence is already talking about you, thank them. Reach out to develop a partnership.
- Leverage local influencers. If you’re a local business, then a local “celebrity” may think nothing much of sharing one of your posts on their account.
- Contact micro-influencers. These are people with lots of followers who are important in their niche. They may not be a household name. But they have influence. If their followers are your target, reach out to see if they’ll share for free mention in exchange for a product or service.
Optimize Your Website
Your website is the home base for all of your marketing efforts. It houses your landing pages for ad campaigns. All of your published content resides there.
Your product and/or service pages call it home. If it doesn’t offer a seamless experience, your brand and business will suffer.
An unoptimized website leads to:
- Poor visibility in searches
- Abysmal conversion rates
- High cart abandonment rates
- Reduced revenues
- Increased ad costs
- Increased customer acquisition costs
- And more
Optimize your site and the opposite becomes true.
How to Optimize Your Website
Optimizing your website means creating the best user experience possible.
Create a web design that’s fast. Make it easy to navigate, find what they’re looking for and get assistance. Only publish top-notch content that’s exactly what people are looking for.
Mobile-optimization is a must.
According to Hubspot, 50% of people who visit a local business on a mobile device will visit the physical store within 1 day.
Use analytics data to continually improve the user experience.
A huge part of optimizing your site is showing search engines that you provide an excellent user experience. This is what SEO (search engine optimization) is all about.
Why do you care what search engines think? Well, over 50% of website traffic now comes in through search queries.
Demonstrate that you provide the best experience to these searchers. And you’ll be rewarded with top spots in search results that are relevant to your business.
In addition to optimizing user experience, SEO experts apply proven strategies. These demonstrate to search engines that you deserve these top spots. These include things like:
- Building up your website authority
- Researching which queries (keywords) your target uses to find sites like yours
- Building content around these queries
- Networking with owners of other industry websites
Optimizing your website is the best way to get the most of your small business marketing budget.
Invest in Your Brand
As a small business, it’s easy to get into a mode of only seeing 2-3 moves ahead. As the pressures to generate revenues now drive you, thinking about your long-term branding strategy can be difficult.
But without a brand you’ll spend more on your small business marketing budget than you should.
Branding can increase revenues by 23% while slashing ad spend. That’s more money in your pocket.
78% of consumers say that they trust a brand that provides them with custom content. 61% say they are influenced by it to purchase. 94% say they are loyal to brands that seem transparent in their content.
How to Build a Small Business Brand
Content marketing is the way small businesses today build a solid brand without the sky-high traditional marketing costs. When you build your brand with content marketing, you’re marketing the way that people today actually shop.
They search on Google. They read reviews. They visit websites. They read branded content. They engage on social media.
This doesn’t change whether you’re a small local business, an ecommerce website, or a huge financial firm.
To get started with content marketing:
- Revisit your goals and customer personas
- Research topics and interests
- Start building your content assets
- Share your content on social media
- Analyze results to continually improve
- Apply the other strategies we’ve discussed in this blog
Sometimes small businesses spend a lot of money increasing brand awareness through social media. Then they get an actual lead and they don’t follow up on it.
It’s not intentional. They just don’t recognize that moment when a person has transitioned from a follower to a lead.
It’s long before they actually contact your company. Lead nurturing now happens online. To maximize your small business marketing budget, you have to both realize that you have a lead and nurture that relationship.
When Does a Follower Become a Lead
There are several levels of social media engagement that represent how close a person is to conversion. These go beyond just cold, warm, and hot.
They can be thought of as follows:
- Cold — They’ve never noticed you. They don’t follow you in any way
- Cool — The person follows you. They very occasionally like or share something
- Lukewarm — The person regularly likes and shares your content
- Warm — The person comments on your posts/content or mentions you in a post. Or they provide you with contact info like an email.
- Hot — Highly qualified. They expressed serious interest and are in the market.
At each level, a little nudge in the form of lead nurturing can move that person to the next stage of the buyer’s journey.
In a social media post, thank your lukewarm leads for being top interactors. This both moves them to warm leads and encourages cool leads to become more engaged.
Interact with your warm leads. Send them more customized content. Be social. Comment on their comments and mentions.
Maximizing Your Small Business Marketing Budget
If you’re not optimizing your marketing strategies, you’re spending more than you should. As a small business, this is a waste you just can’t afford. But this year will be different when you apply these strategies.