Small business and paid marketing questions

Have you guys seen tv shows like Hotel Impossible or Restaurant Impossible where it’s revealed that the shop owner is half a million dollars in debt and about to lose his shop, home, and family, and when the host asks for financial details he learns things like this:

invested $$$$ in shop first year
brought in $ revenue first year
purchased equipment for $$$$ second year
brought in $ revenue second year
spent $$$$ on painting shop and new furniture third year
brought in $ revenue third year

and you’re sitting there yelling at the tv “why the F#$% are you spending all this money when you have no sales”?

That’s always me. I always wonder what kind of magical thinking is required for people to keep throwing cash out the door thinking that it will turn the business around.

Well, now I own a small shop. No, I haven’t done this, but I’m starting to see how it’s possible. What I’m looking at for my shop is the fact that without investing in marketing, my shop will go nowhere. Some gentle probing has granted me some marketing quotes: $500 to advertise on a review site, $2000 for a featured review on a blogger’s site, etc. So what I’m puzzling out now is how to know if any of those expenditures would actually result in sales. Also how do you judge return on marketing investment as a small business?

Anybody here deal with this problem?

It comes down to guesswork. It’s why advertising sales positions exist. Their job is to convince people like you there will be return on investment. It can be rather difficult to predict future results but they can show past results for similar companies. You can get higher educated guesses the more money you want to sink into it.

The easiest way to track your advertising success is coupon codes. Your blogger review can have a coupon code attached to it. Then you can track how many sales use that code. For online sales you could also direct people through a separate portal with an advertisement so you could total sales through that portal to gauge effectiveness.

What is your business?

You’ve got the online pet gift/things/stuff site if I recall?

Analytics (Google, Facebook etc). Properly set up to track everything from referral sites to conversions for any and every goal that matters to you. Then regularly review, and cut out the activity that is not leading to sales, or sales that are underperforming.

SEO - don’t rely just on paid advertising to drive traffic - if you’ve got lots of items on their own page you have the ability to rank each page for a targeted keyword, and those 1-2 hits a day multiplied by hundreds of pages means decent site traffic.

Don’t assume that a $2000 spend to a popular blogger is going to send sales thundering your way. You need to build awareness and that takes time, and probably can’t be a quick win. Old school marketing was big ad spend a few times a year - now the theory is small amounts to keep you constantly in the market. Facebook could work well for you if you target people based on interest, and keep the creative…well, creative!

Remarketing - a great way to draw people back to abandoned shopping carts.

Blogging - where is your target market online? What problems do they have? What are they searching for? Well written blogs (done regularly) can also bring in the right sort of traffic (an example of this is - had great articles about how to cope with kids sleep issues and I used it a lot - and also bought lots of things from them as a result).

One of the great business questions of all time. As someone once said:

“Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”

Its essentially applying the scientific method to your business hypothesis. Consider all of your assumptions about your business, including advertising or marketing as just guesses that you really aren’t sure about. then go to people who you think are your customers and ask them open ended questions about how they purchase, why they purchase, what problems they want to have addressed, and even marketing type questions about how they learn about a product or company to make the purchase.

There are lots of online resources and books. Steve Blank and Eric Ries are leaders in the field.

Okay, I may be on the right track with slowly building awareness of my shop. It’s only been open for 2 months. I had 4 sales the first month and none so far this month despite having visitors, so I was doubting myself. I do have a Google Adwords campaign currently running and I’ve been watching it with fascination and tweaking it ever day. The thing that puzzles me with SEO is that they quote you cost per click and Google had me set it up with a daily budget, like $/day. I understand cost per click, but the daily budget is not how I do things. I have a set budget for the campaign, $125. So, completely guessing, I first set it up as $5/day and watched it closely to make sure I wasn’t suddenly slammed with an invoice for thousands of dollars! Last night I saw that my bill was only up to $16, so I tweaked it up to $10/day. It sounds like the touchy-feely approach is okay?

I have other things going on also. I spent a few hundred on brochures, and donated a couple items to rescue organizations. I’m also going to run two promotions in April with a randomly-picked prize winner for those who participate in them. I hope those promotions are viewed as fun in order to get participants (they’re being promoted by me and the rescue organizations in partnership). The reviewer sites and blog reviews are just more ideas I’ve been tossing around, looking for the best bang for my buck.

Good reminder! I do have a blog integrated with my store and I’ve been writing articles that I then tweet/post to Facebook. I think I do need to focus them more on how specific products can solve problems like you describe.

I know I can try this with a survey, is that the best approach? I know that I could spend big bucks buying that kind of data but I don’t have the budget for that yet. What are reasonable enticements to get people to do the surveys? Is this touchy-feely also?

To answer one of your specific questions: One of the best ways to measure return on marketing is to track how each new client heard about you when you run their sales. Google, brochures, signs, word of mouth, etc.

Ideally, you even want two numbers: first-time sales (new customers), and then long-term sales (returning customers). This might show you trends like maybe people who find you through Google purchase once and don’t come back, but people who get your brochures come back twice a year. Some of your advertising efforts will not be done showing you results until months or years after the efforts are through.

Example from my business: I put on a booth at a local city festival for a few years before I stopped. I am still getting new business from those appearances. One person held my card for five years and when he was unhappy with his old CPA, he came right to me and has been back every year since. So those festivals generated very little immediate response, but the long-term payoff has made it one of my best sources. In comparison, my yellow pages ads generated little enough business at all, and none of them came back a second year. I know those results with a great deal of accuracy because we ask every client how they found out, and enter that information into our billing/customer management system that can generate reports showing single years and multiple years.

The blog is probably the number one way for you to get interest without spending money (just time). Facebook especially. When people follow your store they want to see articles relevant to them in their Facebook feed. Blog posts about your pets, the local rescue, the dog park, etc, are all things to keep you on their minds. It’s also great at generating content in general, and Google LOVES new, unique, and updated content. You’ll get a higher page ranking that way.

Internet ads are a low-cost option but as you said sometimes have a confusing price structure or don’t mesh with your current campaign.

Another is email advertising, of which you can get free low-volume service for. You can even have a opt-in process that asks them where they heard of you. But you must do a an opt-in process or you’ll be smacked for spam. I also recommend a low send rate - even once a week may be too much for some people.

The yellow pages are worthless.

I don’t follow Twitter or Facebook feeds that serve only as links to other items. As a customer I want to feel like I am getting unique content, even if that just means you crosspost by hand sometimes.

Depending on your specific niche, you might want to consider moving from a primarily outbound marketing strategy to an inbound one. It really depends on the quality of the value added content and information you provide to the market and your potential customers.

I’ve had some reasonable success with Hubspot, and later moved to Ontraport, which I find is very effective. YMMV, and of course, your niche and marketing goals might not match up as well to inbound as to outbound marketing.

According to the experts, a survey is probably the worst way to glean real market information from Lean Startup methods. THey recommend you talk to potential customers in person and ask casual, open ended questions about what pains they may have. Let them tell you what they are looking for, don’t lead them to your preconceived hypothesis; whether it be what they want to buy, if they like your product or how they find out about the companies they buy from. You would interview them, but don’t even think of it as an interview, just a conversation where you are asking questions about their behavior. You may learn that one or several of your ideas for reaching them is actually true (validated) or you may find that what you thought was off base, in which case you can pivot to a new hypothesis. Its all about recognizing your ideas are only guesses, and going out to confirm or invalidate those guesses. I know something about this, but I don’t have nearly the expertise of those resources you can find on the web…

You can also look up the Business Model Canvas and use a template to write down you business hypotheses and make changes as you learn more.

John Wanamaker, the founder of the first department store.

The traditional advertising model is breaking down, although a lot of people don’t realize it yet. A large number of people have been scammed, or know somebody who has, which means that fewer and fewer people trust a business that they don’t know.

More and more businesses are turning towards word of mouth advertising and referrals. It’s a lot cheaper (although sometimes slower), and it tends to build a much more loyal customer base.

OP, if you aren’t in any networking groups, find 2 or 3 to join. Some are completely free.

More and more people are doing business with people that they know, like, and trust. That’s the wave of the future.

To your second point first - I think you’re in danger of spending money on marketing without a real goal in mind, and then you’ll add it up towards the end of the year and realise you’ve spent a good deal with no idea of the actual return. Plan everything out, and work out how it will directly get you traffic, and measure which performs best in terms of sales. So no just giving things away in the hopes it will deliver something - a real plan.

Back to Analytics - Adwords (not SEO which is the process of getting good unpaid search positioning on Google) is a real factor of getting the keyword, bid and ad copy right (plus the actual landing page - directing all ads to your homepage is not a great idea - landing pages can increase conversion by up to 25%). Focus less on what you spend, the actual click through rate and more on your CPA (cost per aquisition) - which keywords are offering the highest conversion (sales). This requires code to be added to your website, but is essential - you’re really just playing around unless you do this.

What’s the average price you’re paying for your keyword clicks? If you’re testing, I’d have a look at Facebook too. We regularly get pricing of under $1 per lead (this is B2B more than B2C) which is very competitive when compared to Adwords - although in Adwords you have more expectation that their intent is to buy something - so they may convert better. This is where proper analysis can help you work out which is better for you.

You’d need ad creative for this - Canva is great for low budgets and has a whole lot of templates that you can either use for free or pay a few dollars for. If you’re design handy, that plus a compelling headline is all you need. Crappy creative won’t achieve anything though, so be honest with yourself.

I mentioned it before, but regularly review your Google Analytics - that’s the analytics of your website not just the Adwords analytics to see how your site is performing. If you’re getting traffic but no sales, why is this? The answer could be in your analytics.

Another suggestion is to set up a popup questionnaire as people leave the site - ask them one question - what were they looking for, what’s their biggest pet concern etc. Could get some valuable insights for free.

Thanks all, this is a great discussion. I’ve been swamped today, so I’ll answer a few things all at once:

Great point, I’ll definitely do this one.

I’m sorry I haven’t had a chance to check out your links but the term isn’t familiar to me. What is inbound marketing?

Crap, having a bad day and fat-fingered the keyboard which caused a premature post, then the edit window expired before I could finish my reply. :mad: So sorry for the mess, but here is the full reply:

Thanks all, this is a great discussion. I’ve been swamped today, so I’ll answer a few things all at once:

Great point, I’ll definitely do this one.

I’m sorry I haven’t had a chance to check out your links but the term isn’t familiar to me. What is inbound marketing?

This is a great point also. I’m in good shape on this one. My initial network is the greyhound rescue community because lots of people there know me from my volunteer work. I can grow my reputation through that, both in person at events and online.

This comes back to my root question: Say I draft a plan, without the experience of having done it before, how do I know what the possible return will be? I mean the internet is full of business and marketing blogs where people tell you all you have to do is X and sales will roll in. My shopping platform has a discussion forum. My fellow shopowners are constantly posting laments on there about how their marketing is getting them thousands of visits and page views a day, but no sales. Something’s not working for them, so I’m not about to spend money on the same strategies they’re clearly losing on.

Coming back to specifics, say I plan to donate one $50 toy to a rescue group who also promises to hand out my brochures. Hypothetically they do hand out all 100 brochures. I wait and after 6 months check and see that I got 1 $50 sale from that effort. Does that tell me that wasn’t a good strategy? It seems like a small sample size. It’s possible that I’ll get more sales later on, like someone else mentioned. How do you estimate return then?

Well in cases where you use a channel without a solid benchmark, you can’t really know for sure. You have to map out the path from the gift to sale, and work through a number of estimates of how many people move onto the next step.

Incidentally this is how it works for Adwords, but it’s just easier to see it (V people search for the keyword -> W people see your ad -> X people click on it -> Y people look around your site (a % will bounce straight back to the search results) -> Z people will buy something. You estimate that perhaps 20% of each group proceed to the next step.

So this helps you work it backwards and forwards - if you want to make 1 sale, how many people need to be exposed to your ad? Or, if X people see it, how many will buy?

Same thing for your toy gift. X brochures given to people who many not be looking to buy, and aren’t sitting in front of a computer - your % who go onto the next step - might be lower than 4%. You can google to see what sort of benchmarks exist for different steps in your sort of industry.

Suggestion, could you instead of printing expensive brochures that go out of date negotiate for your rescue partners to send out an email to their database on your behalf? Immediately you can be sure they actually go out, and then you can get insight into how many people click, visit and buy.

Then every month you check how your campaigns are running - which activity is driving more clicks, more sales. Are certain messages or toys performing better? Promote them more.

It’s called optimisation - so make an educated guess, then monitor it, then change up what you’re doing to see if you can improve it.

Other things to look up to think about in the future would be A/B testing (changing one thing on an ad, landing page etc and seeing whether A or B works better), and inbound marketing - this is predicated on the theory that push marketing (advertising) is less effective and requires you to blog weekly/several times weekly to rank organically, plus the production of a long form piece of content (an ebook, infographic, tool of some sort etc) to build up a mailing list.

estimate it,

If your marketing gets you thousands of visits a day, there’s nothing wrong with the marketing; it did its job. There has to be some other reason the conversion rates are so low.

True, we check each other’s shops and give feedback. In many cases they can tweak this or that. I also suspect that the online shopping market is saturated and you have to have something really novel and unique to get a good response out of the starting gate.

I have an “app” attached to my shop that gives me sort of the equivalent of Google Analytics, but they also have recordings of visitors to my shop. I play back a session recording and can see where the customer moves the mouse, what they click on, how they scroll, etc in real time. That’s SO helpful for verifying that the site is functional. I’m seeing a lot of exploration of the site, which is good. With the Adwords campaign going on, I’m seeing that most of the clickthroughs from that are garbage. The lead clicks the ad through to my shop and immediately leaves again. Are those bots? Or just people who click the ads just to support the site they’re shown on (and cost me money!) with no real interest in the ad?

A fascinating bit of human nature that I didn’t expect. I haven’t used my finger to trace where I’m reading since about 5 years old. I’ve always wondered how website analytics could tell where people were looking on your page. It turns out that a significant number of people point with the mouse (or finger, on touch devices) where they’re reading on a page! In the recordings, I often see the mouse track from image to link to text block and scan that and back again before they decide what to click on.

Probably not bots or competitors, more likely people curious about your ad, but not seeing what they thought they’d find quickly. Are you using specific landing pages for each ad? Maybe the keywords you’ve chosen aren’t right.

Yeah, each ad goes to a specific page. I only have two ads running for now due to my tiny budget, but tweak various thing every day or two. I’m actually having fun with all the features (configurations and customizable reports) in Adwords.

The site analytics app I’m using is so detailed that I noticed it shows me what people search for when they use my shop search tool. I’ve started a spreadsheet to tally how many times people search things. That will take a while but will help me identify what people are looking for and not finding.