Month: October 2016

We have already talked about: Price and Product. Now it is time to talk about the most fun portion, the Promotion. Promotion is the act of letting people know about your product or service. Promotion is probably the broadest of all of the 4 P’s because it impacts every part of the business.

One of the first things I tell clients is that good word of mouth is the best way to build a business. Good word of mouth is the cheapest and most consistent way to grow. This relies on great service and a great product. Part of promotion is to ensure that you invest the resources to make sure that service is great and the product is great. You do not want to draw more attention to subpar levels of product or service. A good promotion is like putting gas on a word of month bonfire not starting a fire that does not exist.

Once we get past word of mouth, then the strategies for promotion start to change dramatically  Certain products, industries, and customer bases are going to use different promotions differently. These can be as mundane as an ad in the classifieds(are those still a thing?) to getting your brand placed in a Hollywood movie.

What are things to think about when considering promotion?

1. Audience- Who is your audience? If you do not know this, please come to a full stop in your marketing. You need to define who your audience is before you can talk to them. This can be as simple as observing your current customer base and noticing trends. It can be as complicated as highering a market research firm to get detailed information on potential customers and their likes and dislikes. This is an area where the old adage, “Measure twice, cut once” can be used. Take the time to make sure that you have an audience to target before you do any promotion.
2. ROI- How much are you spending and how much do you anticipate that returning in revenue? Sometimes this is hard to do if you are doing a branding campaign This can also be difficult because often the effects will not be known until after the campaign is over. But track ROI and use success and failures of the past to consider new opportunities.
3. Goals- What are your goals in your promotion? You need to think ahead of time what your goals are in order to make sure your promotion matches up with your goals. If your goal is in store visits, does the promotion lead to this? If the goal is branding, are you prepared to pay in the long term the cost of positioning yourself in your target audience?
4. Are you ready?- Are you ready for the new customers that may come out of a promotion? Do you have the infrastructure in place to ensure you have a chance to make a fan of the new customers? If not, hit pause for a little while to work on being prepared. An ounce of prevention is worth a pound of cure.Additionally are you ready with your branding to make good decisions on what kind of ads to use and where to place them? Are you creating promotions that help people think about your business the way you want them to? Be sure to think about that on the front end to not create brand confusion.

Do you have questions about how to use the 4 P’s for your business? If so, let’s talk.

Sometimes a win for someone is a fail for someone else. When the Michigan Wolverines took on the Rutgers Scarlet Knights the game, if you can call it that, was a beatdown. Michigan won 78-0. This was not a small school or anything, this was a conference opponent, and Rutgers was at home. But that win for Michigan was a loss from one local business:

 

This turned into two fails for Ruth’s Chris.

1. They were about to lose a lot of money. A promotion that sounded like a good idea turned out to be extremely costly. As one Facebook commentator said:
   
2. They backed down. Either through initial error or fear Ruth’s Chris revised the post during the game to limit the promotion to 50% off. This is where the real fail came. This is was not missed by the social media world at large. This was a trending topic around the US this weekend. There was lots of backlash on the internet. 
   Before your next promotion, be sure to count the cost and double check the rules. This could have been a huge win if they had owned their mistake and took advantage of it promotionally. They could have achieved this by doing news stories and possibly inviting the team for dinner. You could have made a video about the craziness of the next week as you honored the offer. This could have been a feel-good story, instead there are lots of angry customers.

I believe every interaction with a customer is an opportunity to make a stark raving fan. Stark raving fans are really good for business and marketing. Referrals and good word of mouth are the most powerful form of marketing. Therefore taking care of customers should be a top priority in any business. This is especially true when something has gone wrong or a customer has an odd request. Is the customer always right? No. But we should help them be right as often as possible.

After I published my review of “Customers For Life” a friend(Randy Moffett) mentioned that he had a great customer service book that I should check out. “Customer Love” is a series of short vignettes of customer service success stories. These stories are between 1-3 pages long and come from a large variety of businesses.

One of the more powerful thoughts about this book is: “Customer service is not a department, it’s an attitude.” To help your team see that everyone is in the customer satisfaction business is huge. Having an entire team empowered and ready to serve the customer is a great way to set yourself apart from the competition.

If you are in a leadership position this might be a great book to use almost as a ‘devotional’ from the team. It might be wise at staff meetings to take time and share one of the short stories from this book.  Another strength of the book is the variety of industries that it covers. It might give you a few good ideas to try and implement with your team.

This is a great coffee table book, bookshelf, or a waiting area book. It is hardcover and brightly covered. Short enough to get engaged quickly but with short bits of info so it is easy to put down.

But my favorite customer service book is still Customers for Life. The big difference between these two is that Customers For Life is about one man’s business and how he ran it, the view is from the inside. Customer Love is written from the outside and some of the stories are even sourced from others work, like Customer Satisfaction is Worthless, Customer Loyalty is Priceless.

For what you can buy this book for on Amazon it is worth it. Use it as short stories with your team or anecdotes with your peer group. But I would also take the time to read Customers For Life and read in more detail about how a man led his company to be a customer service powerhouse.

Last week we talked about product and now we move to price. As a small business owner, the hardest thing I ever do is price my product. Pricing is difficult because you are trying to balance a few things: costs, profit, and customers.

1. Costs: If you are doing something as a hobby, it might be better to not count the costs of making your product. It is absolutely fine to do something on the side and do it for fun. Maybe that is knitting or photography. But if you ever want to grow it into a business, you must start accounting for costs sooner than later. Some businesses like a restaurant have lots of costs, product, labor, housing. Some businesses like mine have very few costs.

   The cost I most often see business owners ignore is his/her labor. If you make a widget and sell it for fun, counting your time is not essential. If you want to make it into a business, you should start checking your time. You will probably have more time in a product than you think and it may turn your hourly rate per product is in the few cents.

2. Profit: One of the goals of pricing is to maximize profit. A question to ask is: How much can I charge? Making a profit is a good thing but the amount of profit has a lot to do with what you are selling and how. I would suggest looking for industry standards to look at what profit margins are being generated by your competitors. But with a higher profit margin comes benefits like being able to retain talent and keep your business running smoothly. One of the biggest factors in deciding profit should be the next point.
3. Customers: How many customers do you want? Something to think about when considering pricing is how many customers do you want to work with at a time. Here are two examples: Little Caesars sells lots of pizza at a razor thin price model. A local high-end pizza shop sells a lot fewer pizzas but charge a lot more and should have a much higher profit margin. Which end of the spectrum do you want to be on? You can sell Lexuses or you can sell Fords and the volume is going to be very different but when you do that, you need to account for your profit margin. Very few people are like Apple and sell a nearly ubiquitous product and have giant profit margins.

There is a lot more to say about pricing but there are better people than me to talk about it. One source is the Businessology show, this episode in particular talks about Value Pricing.

Marketers can help you determine pricing with surveys and customer feedback. But we can also be a cost to account for in your pricing. Pricing is one of the things that should be constantly evaluated and changed based on the current situation of demand and costs.

Read on Product here. 

Promotion (coming soon)

Place (coming soon)