In Australia only one in every five businesses that start up make it past the five year mark. Many business owners when planning their business strategy often assume that if they open their doors, the customers will come.
With this mode of thinking, many small businesses are shocked when they do open their business and the customers don’t come.
A marketing strategy should be high on the priority list when starting a business, but unfortunately, rent, power, taxes, fit outs, staff costs and signage all come before procuring customers. In fact only one in 20 businesses have a plan in place for business success before starting out. Cash flow shortages when the customers don’t come then cause a stranglehold on their business future.
Paid advertising is just one part of your marketing strategy and the one that is most likely to bring in new customers and get new customers coming back. If you have limited funds you have to ask yourself what is the best advertising for my business? And to know the answer, you must understand your customer demographics.
Demographics is the statistical data of a selection of the population. For example, an 18 year old female has different habits and needs to that of a 60 year old man or woman, so researching the statistical information of a teenager’s daily habits and needs is vitally important to your business success if that is who you are targeting.
Understanding who needs your products and services is as important as understanding what problem you solve for your customers. To decide what advertising is best for your business, you need to understand your customers’ daily schedule. Do they drive to work, do they listen to the radio at home or in the car on the way to work? Do they pick children up from school? What times of the day are they using social media? Do they watch free to air television?
So what considerations do you need to make before choosing what advertising is best for your business?
Will the advertising reach your target audience?
This is the most important question you need to ask yourself. There’s no point advertising on free to air television if your customer is a teenager as the statistics show that free to air television watching for that age group is very low.
Your customers’ habits may be different to yours
Just because you listen to the radio at 6am in the morning, doesn’t mean your customers do. You may read a newspaper each day, but your customers may not. So research who buys your products and why very carefully. Get to know your customers habits and then choose the right advertising medium for your type of business.
Budgeting for advertising spend
When you start your business you need to have a budget for advertising, regardless of what platform you intend to use. If you don’t budget, you will find that there’s never enough money at the end of the day to reach new and existing customers. If you are relying on word of mouth, you had better have a great customer service procedure and upsell strategy or if you think Facebook will work with just a few posts, then you will need to have and give a good reason for your followers to buy from you and a plan to secure followers.
But, again, if you don’t understand your customer demographics or choose the wrong platform, you could be spending money that brings you no return on investment.
Related article: What are the different forms of advertising?
What is a good return on investment (ROI)?
Many business owners have wildly inflated expectations on ROI. A return on investment ratio of 5:1 is a very good return, but most people only get a 25% to 50% increase on their spend. This means if you spend $100 per week you will normally increase sales over the week by $150 – you spend $100 to make $50 extra. It doesn’t sound like a lot, but it’s better than not advertising at all.
With the right strategy and expenditure ROI can be as high as 10:1, but to do this you need to seek professional advice from companies that have proven results. Your ROI will also depend on whether you are doing a call to action campaign as part of your strategy. For example, Ecommerce clients will get a higher ROI faster using call to action strategies to make their prospective customers buy sooner rather than later.
A paid advertising strategy is an essential part of running a successful business so make sure you budget for it and before choosing the right advertising platform for your business, either traditional or digital advertising, or even a mix of both, get to know your customers first.
Cheryl Jowitt is co-founder of Rebel Connect PL, a family owned and operated Australian business that provides total marketing solutions for small to medium-sized businesses. Rebel Connect clients have access to advertising across the company’s radio networks, Rebel FM & the Breeze and Rebel Digital, a digital marketing solutions company providing website development, SEM & social media marketing strategies, video and social media management.