It is a mistake to think about marketing as a cost

When the economy gets tough, some businesses cut back on marketing along with their other costs, thinking they can lie low and wait out the next opportunity. There are two mistakes with this kind of thinking to discuss, even before we get to the point of this article.

First, it is a mistake to think about marketing as a cost. It isn’t a cost if you know your numbers and you know how much money in new business you should reap from your marketing. This number is your return on investment (ROI). The money you spend on marketing is, and should be, an investment — not a cost.

Second, not all recessions are the same, so you can’t bet that waiting on the sidelines is a strategy that will even keep you in the game. Right now, you need to be making “real time” changes in your business that will let you take advantage of the opportunities you see — and there will be opportunities. Maybe just the fact that your competition finds the market tough is the opportunity you need to take their spot in the marketplace.

Let’s look at six more major business mistakes that people are making right now in their business and how you can overcome them.


Great ideas are frequently born around the kitchen table. Unfortunately, so are bad ones. The real question is: How do you know the difference?

My experience has been that everyone (including me), thinks their ideas are best. Frequently, however, we are surprised to discover that the idea didn’t work. If people like the Coca-Cola Company can make a major marketing blunder, dropping “old” Coke for “new” Coke — or the entire American auto industry can market the wrong product at the wrong time, then all of us can make mistakes. The problem with business marketing mistakes is that they are expensive, as the tax payers are going to find out in the auto bailout.

Is there anything we can do in our own business? Absolutely! Test your ideas first. Test, you say? Test your ideas first? Yes, that’s what I’m suggesting. It is a little more work. It’s a little more time consuming. But guess what? It saves money, and it absolutely works.

Let’s say you have ten outside salesman. Each salesman calls on 20 people per day, and closes four sales. If you could change the presentation they make, and increase your sales by one sale per salesman, your sales would increase by 25%! The problem you face, however, is that a change could also result in lowering everyone’s production. Potentially this decision could be so big that it could actually put you out of business. The result of this predicament is failure to act.

Instead, test the new presentation. Take two of your best salesmen, and let them try the new presentation. Monitor the results. Does it work? If so, immediately change and adopt the new presentation throughout your organization. Use your best salesmen because if they can’t do it, then it is likely that the others can’t either.

Sales presentations aren’t the only things to test. Test your ads. Do they pull better in your local newspaper, or in other mediums, like local magazines? Which works better? Compare the costs per reader. Does the response rate improve if you add one additional color to the ad? If it helps, use it. If it doesn’t, now you know, and you also know how to save yourself some money.

Test your prices. This is one of the craziest things in business. Sometimes raising your price will actually improve sales. Okay, so you don’t believe me. Try it and see. Some things that wouldn’t sell for $19.00 sell better at $24.95, and sometimes even better at $149. Don’t ask me why exactly, but it has to do with the perception of value. Increasing the price doesn’t work all the time, just like decreasing the price doesn’t. The point is that you must test, and constantly re-test, to see which price works the best. The other point which is important to make on this particular topic is that once you have decided which price is correct, don’t let yourself be lulled into the thought that it should always stay the same price. At least once a year, re-test your prices to determine whether or not increasing or decreasing will have a better success rate than your current price.

It is far cheaper to test many ideas to find one that works

than it is to throw money at “hunches” you think are right.


Ninety-five percent of all advertising you see is institutional advertising. For those of you who aren’t sure, institutional advertising is the type that tells you how wonderful and terrific the company is that is putting on the advertisement, but fails to tell you much about products. More importantly, while institutional advertising may create a feel good response on the part of the person it is directed to, it does not create a direct response that offers the ability for the customer to act.

The result is wasted advertising dollars, except in loose terms of brand identity. Small advertisers can’t afford to lose money this way. Unfortunately, small advertisers frequently copy the large advertisers. They also frequently copy their bad mistakes, and try to use institutional advertising. Again, the result winds up the same. The small advertiser develops an ad which may bring some feel good response on the part of its viewer, but does not bring the type of response which results in a sale. If you are a small advertiser, you simply cannot afford to make this kind of mistake.

Direct response advertising is different. Its entire purpose is to elicit a direct response from the viewer. This means that the intention of the ad is to get the viewer to act at that particular moment and make a call, send in money, go to a website, order a free report, or use some method of responding directly to the ad. The difference between direct response advertising and institutional advertising is that direct response advertising produces direct results. Direct response advertising doesn’t waste its time with superficial information about the company, and its motivation for success. Instead, it talks about the product, what it will do for its consumer, and why they should specifically purchase the product with all of its benefits now. Direct response advertising answers the questions of who, what, where, when, why, and how. Then, it ends with a call to action on the part of the reader.

For those of you who may be reading this, and remaining skeptical, all I ask you do is utilize direct response with testing (point number one). Take a certain amount of your advertising budget, and leave it with the same type of advertisements you have been running. Take the other half, and utilize direct response advertising. After a three month period (which is a good test marketing run), you tell me which works the best. Clearly, you will discover that direct response advertising far out-pulls the institutional advertising in terms of return on investments (ROI), and you will be well on your way to increased sales.

Use institutional advertising only when you become an institution.

In the meantime, make money with direct response.


Every person, product and company has a “Unique Selling Proposition.” Maybe you are the fastest in your business. Maybe you provide the best service in your business. It could be that your product is the least expensive available in the market. Whatever the reason, you have a unique selling proposition, or you should create a specific one, to separate yourself from your competitors.

Once you discover what your USP is, you should feature it in every advertisement you place. If you are open 24-hours a day and no one else in the industry is, then make certain you promote that as unique to your store. While your USP may not be attractive to everyone, it will be attractive to a certain segment of people, and those people will be your buyers.

Developing your USP is a must. It is the integral part which separates you from your competition. Without hammering it to the marketplace on a daily basis, you become one of the numbers in the crowd.

Federal Express utilized the USP of getting a letter to an individual guaranteed by the next morning in an industry that had no reliability to it. It created a USP, and with it, went on to become a multi-billion dollar company. Apple computers took a unique method of utilizing icons and pictures to create a new method of using computers, which simplified what had previously been a complex array of letters and numbers. Carving out this niche, the “MAC” became the second leading computer system in the industry, and the iPod and iPhone are blockbuster sellers.

How is your business unique? What is the one feature that you offer that no one else offers to their customers? Why should a customer pick your company over any of the other companies offering a similar product or service? Discover this answer, and use it in all of your advertising and marketing materials. Hammer it home constantly, over and over in public.

Your unique selling proposition (USP) is the reason your

customers set you apart from the rest. If you don’t have

one (USP) they won’t set you apart.


Most companies spend a great deal of money getting their customer in the front door. Once they do, and the customer purchases a product, the owner feels he has accomplished his goal and objective of making a sale. The sad truth is these companies and owners do not realize that they have only begun the sale, instead of ending the sale. Too often these companies stop selling at this point. Having captured the customer and sale, they neglect the most profitable part of the business: The Back-End Sale.

While making a sale in the front-end is unquestionably important, the key everyone should realize is that what has really taken place is that a long-term customer has just been generated. What happens with this customer now separates the truly successful businesses from those which remain moderately successful.

What should you expect from the follow-up business? A simple rule of thumb is that 20% of the people you get in the first sale will become high-end product customers. That means that these individuals are pleased with your company’s performance and will be willing to purchase more products, and more expensive ones. Let me give you an example: Let’s say that you are selling a $19.95 product. This is sold to 1,000 people through a direct response advertisement, such as the one we discussed in point number two. Of the 1,000 people who purchase the initial $19.95 product, at least 200 (20%) of those individuals will be immediate candidates for a product priced higher (anywhere from $499 to $1,000). You will note from the initial sale, that the total gross of 1,000 people at $19.95 produced $19,950.00 worth of income. If you are then able to take the 200 people representing 20%, and convert them to $1,000 purchasers, you would then produce a gross of $200,000 on the next immediate sale. Obviously, forgetting the Back-End Sale is extremely expensive.

Another point that needs to be made is that this is only from the initial and second sale. Now that you have captured these people as potential long-term customers, they should be placed in your database and constantly contacted to buy additional products. Again, from this experience, clients will continue to purchase additional products, some on the lower end and some on the higher end. The point is, they must be captured in a database and constantly communicated with and offered additional products. This is also true of the other 80% who will buy again but perhaps not as frequently.

The result of the example above is important for another point regarding advertising and sales in general. Frequently, advertising will be written-off if it produces only a volume of sales which break even. In other words, if the advertising campaign costs $2,000, and it produces $2,000 worth of income (even on a net income basis), the campaign will be written off as a failure because it only broke even. However, what you must remember is that some of those customers you just obtained will buy again and again. What most businesses miss is the opportunity to measure this advertising campaign based on anything other than the initial sale. This is another huge mistake. Remember, the post-sale success should be more profitable than the initial sale’s success.

The single most profitable product you have
is your back-end sale.


The single most important asset that any company has is the database of names and addresses of its customer base. Nevertheless, at least 80% of companies never maintain a database of their customers. Think about it. You spend thousands and thousands of dollars getting people in the door, and once you have separated these key customers from all of the other thousands of people who totally disregard your advertisement, they are neglected for future advertising. Instead, you continue along with your institutional advertising, trying to get more and more new customers. Try something new, concentrate on your customer base as you capture it instead, and gear at least a growing portion of your advertising dollars solely to these individuals. They are proven successful buyers, and as long as you provide the quality and quantity of the products that attracted them in the first place, they will continue to buy from you for years to come.

Once you have become one of those few companies that successfully capture the names and addresses of their customers, go a step further to find out specific information about that customer. What type of product do they like? What services are they most interested in? Once you classify these customers, you can now target advertising based on sales of products which will be most attractive to those customers.

Let’s take a clothing store and use it as an example. If a clothing store kept a database on me, they would find that I frequent the casual area of the store, and prefer Tommy Bahama shirts. If the store uses this information in a database, they can now do pinpoint marketing. Every time they have a sale on Tommy Bahama shirts, who should they send a post card to? Which advertising do you think would be more successful — an institutional ad in the newspaper about the store, or a direct contact with 1,000 people who you know like to buy Tommy Bahama shirts? I think you get my point.

The lifetime value of a repeat customer is
a company’s biggest asset.


Want to know one of the biggest marketing mistakes made by most every company? They stop doing what works. I know it sounds crazy, but it happens over and over again. The company may have had an ad which has run for years. It worked every time. A new employee comes in who wants to show some new pizzazz, and says, “What we need to do is change our image. We need to drop the old ad for this clearer, fresher look.” Do I have to tell you what happens? Friends, if something works, let it ride. Better still, let it roll. Your goal is to find the best ad by testing until you know it works. Once you know for sure, you do a “roll-out.” This means you take as much money as you can, and leverage this winner until it stops producing. As long as it keeps hitting your numbers, keep pounding it out.

If upon occasion you want to test a new ad, keep the old one running as a control, and test the new one. If the new one works better than the old one you can either use the new one and roll it out with all your marketing dollars, or use both as long as they keep working.

Never forget what works and always expand on success.



Now you have them. Use these Golden Nuggets and they will make you money. Remember, while I can tell you what I know, I can’t do it for you.

Once you learn a rule that works, don’t forget to apply it.

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