Making the investment in your business
How do I know what the return on investment (ROI) is for marketing my business? Let’s be clear, no matter what business or industry you may be in, you’re also in the marketing business. Without marketing, there’s no sales. Without sales, there’s no business.
Some businesses don’t think they invest in marketing. They say things like “We get all our business from word-of-mouth.” They may consistently have more work than they can handle, and are always working at full capacity. They may have built an excellent reputation for the work they do, the products they make, or the services they provide.
Getting referrals and building a solid reputation are actually fundamental forms of marketing. So is providing great customer service. If you’re a small business with fixed amount of hours available to serve customers, it’s great to be known for what you do by enough people that you don’t need to invest dollars into marketing and advertising. In this case, your investment is doing great work or making great products, and letting others do your “advertising” for you.
The fundamental purpose of marketing is to generate sales. Spend a dollar on marketing to make $1.25, or, even better, spend a dollar to make $100. That is the principle of ROI (return on investment). In the first case, a one dollar marketing spend generates $1.25. That would be a 25% return. This assumes that the $1.25 is all profit. Obviously if it costs you $.50 to make the product/sale, the return is now much lower and, in fact, a negative . With our second example, again assuming that the sale is all profit, the return is 100 times the spend, or a 9,900% return on investment.
Companies that are intentionally trying to grow sales and increase profits need to market themselves. That applies to the vast majority of us. If you are a one person company, you can increase sales and profits by:
- working more
- charging more
- reducing expenses
- a combination of any of these
Small companies selling their time and labour are also in this situation. Once you reach maximum productivity, you can’t work more without increasing your capacity. That may mean hiring more people (an expense), expanding your facilities (an expense), or using technology to increase efficiency (again, most likely an expense).
When and why do I use marketing for my business?
Marketing is intended to fill the sales funnel with new opportunities. If you have capacity (available staff hours), marketing activities can close the gap between how much work you can handle and how much demand for that work you have coming in. For product-based businesses, marketing can keep demand for your products in line with inventories and production capacity. Some forms of marketing, such as paid search advertising (ex. Google ads) can function much like a “tap” that can be turned on and off, or adjusted up or down, to control demand to align with supply or capacity.
Advertising is a component of marketing. You pay for some form of ad, digital or physical, with the intention of generating sales and increasing sales opportunities. Advertising works. That’s why we still do it after all these years. However, some forms of advertising are easier to measure and demonstrate the results and the return on investment. Digital marketing can provide metrics and insights that go beyond what advertisers could only imagine just a few years ago. But even a traditional ad campaign can be executed in such a way that you can reasonably measure the results. Think of a coupon in a print ad that has to be clipped and submitted to receive the offer. Track that coupon and you have some measurable results.
However, there are customers that may make a purchase because of your ad but not bother to clip the coupon. The ad still results in a sale, and the profit margin on that sale is even higher because the customer forgoes the built-in discount you offered. That is great but not easily trackable.
There are other types of marketing beyond advertising. Content marketing involves providing useful information to audiences so they get to know you better. They associate the information with you. This can be done in a variety of ways, and is most successful when executed with thoughtfully planned coordination. Content in the form of blog posts can live on your company website, be included in a newsletter (email marketing), and shared with audiences on social media. It takes time and effort to create this kind of content so it makes sense to use a strategy that makes sure it will be seen by enough eyeballs (and the right eyeballs) to make the effort worthwhile.
Content marketing takes more time to get traction but has lasting benefits. A solid blog article or short video can generate new leads and business years after it was first created.
Brand building is about creating awareness of your business offering with audiences. This can be achieved through advertising, content marketing, sponsorships, active participation on social media, hosting events, garnering reviews, generating media coverage, and many other approaches. Creating brand awareness takes time, but can have a lasting positive impact on sales. The more people who know about you, and what you offer, the more likely they are to come directly to you when they need what you provide.
Muse is a “branding first” marketing agency. What does that mean? We think it’s vitally important to make sure a brand is “business ready” before investing dollars in marketing activities. Make sure the visual brand (logo, website, packaging, and sales materials) are prepared professionally and used consistently and with purpose. The messaging (how you describe your company, services, products, and culture) also needs to be ready for the world. Your existing customers already know and like your brand. They don’t need convincing. But what are you saying, and how do you come across, to those who don’t already know you? That’s where we focus our initial efforts. When your brand is ready for business, now you are ready to take it to the world.
The benefits of branding extend beyond attracting new customers. Your regular customers will be impressed when they see you are taking your business seriously, and to the next level. This can have a positive impact on customer retention. Maybe they were thinking about going to the new, shiny competition. When they see that you are not just standing around hoping to keep their business, but intentionally moving forward with purpose, they might just decide to stick with you.
We’ve seen it happen with every brand we’ve worked with. Freshening up a solid existing brand, or transforming a tired and dated brand, injects a fresh energy into the business owners, management, staff, existing customers, suppliers, and referral sources. It also kick-starts new business opportunities. This energy and enthusiasm is contagious. Some businesses have experienced an increase in business before their new branding has even been launched. While we can’t fully explain this phenomenon, we do know that when a business gets excited about change, it catches on and spreads through the entire culture of the company. And that’s the magic.
Are you looking to invest in your business and want a predictable return on your investment? Connect with us today to start building your business for tomorrow.