In a nutshell, the best type of marketing for small businesses is one that delivers the best results and the lowest customer or client acquisition cost. But if we are to look deeper, you as a small business owner or a marketing manager need to know the following:
There are really two types of marketing out there. There's inbound and outbound.
Inbound means attracting. Outbound means you’re trying to get the message across by sending it outbound.
Typically inbound works quite a bit better because when you’re trying to attract someone, chances are they’re going to be attracted to you when they have a problem, a need or a want that needs to be filled (i.e. something that you have to sell).
When you run an outbound strategy, you may be targeting thousands, tens of thousands or even millions of people (in the case of larger companies) in the hopes that you will convert a few of them to paying customers. Many of the people you’re trying to target when you go outbound, however, are likely not looking for what you have to sell.
Whereas inbound strategy is highly efficient. If prospects are looking for something that you have to sell, they will find you. Inbound marketing allows prospects to find you when they, voluntarily, are searching for the exact product, service, or expertise and information your business has to offer.
Let’s focus on inbound for a few minutes and talk about this effective marketing strategy for small businesses.
The type of inbound most effective for small businesses. As of 2020, the overwhelming majority of inbound search happens in Google.
When people have commercial intent, when people want to buy something, we all tend to use Google to search for topics, companies, service providers or products related to it.
Our search rolls out in phases.
Phase number one is awareness. You’re aware that you have a need, a want, or a desire for something and you may start looking for something in that category.
If it’s a need, you will say: you know I have this problem and I need to fill it and I don’t really understand how to fill it yet so I’m looking for answers to this problem.
In the next phase after awareness, you go into consideration. Now that you know what the problem is, now you’re considering various types of solutions for the problem that may be vendor agnostic. It doesn’t matter what your business is, it doesn’t matter the brand name of the solution or the service or the product. You’re just looking for various types of solutions to the problem or need.
Then the final stage is in making a decision. Once you go from awareness to consideration to the decision stage, you’re looking for particular solutions with particular vendors or manufacturers and you’re trying to decide whether you actually want to buy from vendor A, B or C.
For example, I am recording this video using a Canon AE-D camera. Before buying it I searched the best types of cameras for recording this type of video. Canon AED in my research was the best camera but my research started with the phrase: “what are the best cameras for vlogging or how to do blogging?”
When I would start researching vlogging, I would read different articles that instructed me on the best process for production; what equipment to use, how to publish, where to publish, how to engage viewers, etc.
One of the aspects the articles mentioned was the need to get a camera and a tripod and a microphone and a light. So my team went out and they started researching what kind of camera, tripod, we needed to buy. Through those phases we got to the decision that we need this type of camera, this type of mic, this type of tripod, this type of light. You get the idea.
These were phases. Was this a big buying decision? Not huge, everything in total cost about $1,500, but people go through the same type of decision-making process whether they’re buying something relatively inexpensive or something that’s very expensive (like consulting services, marketing service, legal service, etc.).
Whatever it may be, we all go through this process. It applies to products and it applies to services. It is best, if you’re a small business, to attract people through inbound marketing.
Does inbound cost money to produce? Absolutely. But typically that inbound marketing, when done right, is offset by the revenue you generate as a result.
Every client that you acquire costs you just a fraction of the revenue that they generate. It is not atypical for a small business to spend between five and twenty five percent per customer depending on the type of business that we have to attract a client.
If you provide services and you may have an opportunity for recurring revenue, this could be nothing if you think of it in terms of the entire lifetime value of the client.
Let’s say an initial spend of that client with you could be $200 and you may want to spend 50% or 100% of that revenue because you know that over the lifetime of the relationship that this client has with your business they may be spending $20, 000 or $5,000 or $10,000 — it will be substantially more than the initial transactional spend. This is a very smart way to think about marketing.
When you acquire a client, you do not get a client to make a transaction or sale, you make a sale to acquire a client. This applies to many businesses. If you’re just selling products, this does not apply to you. So whenever you think about the types of marketing that you’re going to do the most expected way to measure it is:
In my next blog post, I’ll continue with important aspects of inbound marketing for small businesses.
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