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Marketing Tactics

5 Marketing Missteps That Make Cash Flow And Business Growth Stumble

If you don’t want your cash flow to turn into a drip, you’ll want to take a look at these mistakes you might be guilty of.

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I am often confused by the decisions normally very smart entrepreneurs make when it comes to marketing and sales, and growing their companies. It’s as though logic flies out the window and emotions rule the day when we start talking about sales and marketing.

Of course, I’m not suggesting entrepreneurs need to be perfect – in fact, I personally made one of these mistakes last year. My issue is with the entrepreneur who doesn’t realise when they are screwing up and continues to let their mistakes hurt their business’s long-term ability to grow.

I recently read a study that looked at businesses’ cash flow. It found that only 12 percent of businesses never have a cash flow issue. That means 12 percent of businesses can consistently pay their bills, pay themselves, and have profits left over. Of the others, 47 percent of businesses say that cash flow is sometimes a problem, and 41 percent of businesses surveyed said cash flow was a consistent problem.

To be fair, this study didn’t publish any additional info about the business owners – for example, did all of these businesses have less than $1 million in annual revenue? If so, I would assume those businesses would have greater cash flow issues than a group of businesses at $1million-plus in revenue. For this discussion, let’s assume this is accurate (based on my experience of working with small businesses, it is pretty close). How do you fix a cash flow issue for any business?

Related: Daniella Shapiro Of Oolala Collection Club’s Smart Strategies For Marketing Your Online Business

The interesting thing is that in the vast majority of cases, your marketing is linked to cash flow issues. The mistakes many entrepreneurs are making with marketing, sales and business growth are the same five mistakes that are causing their cash flow issue.

1. Not making customer retention a priority in your marketing strategy

I’m going to start with the one that is most near and dear to my heart: customer retention. You don’t have to use a newsletter to grow and maintain retention (although that is a good idea). But, you do have to do something, and that something needs its own budget. Retention is not a portion of the marketing budget. Without customers, your business is worth just about zero.

The reason so many businesses struggle to grow is they invest nothing in retention. These normally smart entrepreneurs have deluded themselves into thinking that their product and services are so amazing and life-changing that people will continue to buy over and over again without prompting.

So what lie do these same entrepreneurs tell themselves when they have 3.5 percent year-over-year revenue growth? Tens of thousands – maybe even hundreds of thousands – of dollars spent on marketing, and only 3.5 percent year-over-year revenue growth? If you’re a large retail chain, that isn’t bad, but for dentists, lawyers, financial advisors, or anyone in a service-based business, that is far from good.

Starting today, you must have a customer retention budget. Use the budget to increase retention, and from there, upsell the existing customers. The longer a customer is with you, the greater the chance for a referral. Their customer lifetime value goes up, too.

Done correctly, your retention campaign can increase sales and create more prospects. Regardless of how you use it, you must have a retention budget.

2. Getting bored with things that make you money

As entrepreneurs, we are prone to getting bored, and that even happens with our marketing. Regardless of how well it is working, we get bored with it and want to try something new. This is a toxic practice on many levels. I understand wanting to try something new, but you never cancel marketing that is working (even if it isn’t exactly crushing it) to try an unproven new thing. When people do this, they are basically saying, “I hate money.”

How many times have you tried a marketing program, only to have it not work out as promised or as quickly as promised? Do not cancel good marketing to chase unicorns. You can also call this tendency “shiny object syndrome.” It’s particularly severe when it comes to hip cutting-edge marketing tactics, like influencer marketing.

If you want to try something new, create a budget and try it. Don’t kill a pipeline of incoming cash to drill for a hopefully more profitable pipeline, because when it doesn’t work, you are screwed. If you can’t afford the new marketing without killing the old marketing that is working, then you shouldn’t be starting the new campaign until you figure out how to pay for it.

These are two huge mistakes that I see small-business owners make all the time that destroy your cash flow.

Related: Henrico Hanekom – Discover Your Inner Marketing Genius

3. Not investing enough money into marketing

I was chatting with a dentist from the greater New York area a while ago, who claimed to be getting patients with this one type of marketing for about $175 each. That is good in the greater New York area because of all the competition. However, just because you hit a home run doesn’t mean you can expect to hit a home run every time you’re up to bat. In that area, it costs $250–$450 to get a new patient in the door.

You will never grow if you’re not willing to invest a realistic amount per new customer. I’ve chatted with entrepreneurs who want to get 50 new customers per month, which should require a budget of at least $12,500, but currently, they only have a budget of $3,000 per month. I hate to break it to you, but you’re never going to hit your goal. If anything, the $12,500 per month you have devoted to marketing may not be enough, because as you scrape the low hanging fruit, you often find you need to increase the amount you’re willing to pay to get a new customer.

4. Feast or famine marketing

This is actually the mistake I made in 2016. We had so much going on in the first half of the year (the feast) that I didn’t plan well enough for July, which is typically a slower month for us (the famine). In July, I need to do more marketing and even spend more money on marketing to make up for all the business I lose when people go on vacation and forget about their campaigns. But, I was planning a vacation myself in July, and in turn, I actually ended up cutting marketing because I didn’t want to do the work that was needed.

Bad planning and a cut in the already planned marketing for July tanked the month. It was our worst month for new sales in nearly two years. You can’t allow a busy period to take your eye off the ball. If you have traditionally slow sales months, you must do more, spend more, and market more, in those months.

5. Cash flow issues demand more marketing, not less

This is the last of the bad ideas for today, but when you are having cash flow issues, shutting down the pipeline that is bringing in the cash you do get is just dumb.

Of course the argument I always get is that the marketing wasn’t working anyway. Well, if that was true, why didn’t you cancel it earlier? Typically, the entrepreneur doesn’t really know whether their marketing is working or not. All they know is they need money, so they cancel marketing to free up cash. That may help the problem this month, but it creates a new problem next month when no new customers show up.

When times are hard, you need to reinvest more in marketing, not less. You must figure out how to close more sales, not get fewer leads. There are lots of good ways to shore up your cash flow situation, but cutting off revenue-generating marketing is not one of them.

This article was originally posted here on Entrepreneur.com.

Shaun Buck is the co-author of No B.S. Guide to Maximum Referrals and Customer Retention (Entrepreneur Press, March 2016) as well as CEO of Boise, Idaho-based The Newsletter Pro, the largest custom print newsletter company in the world—printing and mailing millions of newsletters annually for diverse industries all over the globe.

Marketing Tactics

Useful Marketing Tactics For Growing Businesses

Customer acquisition, customer experience and content marketing can be identified as the three most important marketing strategy areas to focus on.

Jandre de Beer

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Digital marketing offers the business world so many advantages, including the ability to communicate with their target markets quickly and easily. Unfortunately, digital marketing has also opened doors for companies to flood mail boxes, news feeds and ad spaces with junk mail and spam resulting in customers tuning out to anything irrelevant and suspicious.

Customers have become less likely to trust companies and less receptive to messages. The only way for valuable messaging to stand out from the noise is if a business knows how to market itself properly.

Over and above advertising, there are a lot of other aspects that contribute towards an effective marketing strategy, these include research, email, content creation, list curation, social media and even customer service. To be a successful marketer it isn’t necessary to become an expert in every single marketing tactic, but it is important to master the most important areas. Customer acquisition, customer experience and content marketing can be identified as the three most important marketing strategy areas to focus on.

1. Customer acquisition

Of course, not all customers are the same. Some customers are only interested in buying products on sale from a particular brand and then never interact with that brand again. Acquiring, and of course retaining customers with a high lifetime value should be the overall objective for businesses, but this requires more time and money being invested in better, more qualified leads. While the upfront costs might be higher, in the long-term this investment will pay off with continued business from these lifetime customers.

2. Customer experience

Competitive pricing can’t be the only aspect that businesses focus on in order to stand out against competitors. In the current digital era customers expect a good customer experience when they deal with brands so this should be an important focus area for all businesses. Customers expect fast and seamless experiences such as intuitive user interfaces and processes, fast websites and service response times, as well as accurate information about the problems they face.

Customers don’t want to waste their time on websites that require them to jump through hoops, and they definitely don’t want to feel misled by anything a business is communicating. Customers will quickly move on to other sites that offer better experiences as well as other businesses that are more trustworthy. Good customer experiences can go a long way.

Offering more personalised, interactive engagement tactics and improving the customer technology interface should be high priorities for businesses.

3. Content marketing

Marketing is no longer about telling customers that your brand is the best. With the movement towards content marketing, marketing has become about showing customers why you are the best. Content marketing is a legitimate, effective strategy that every business and brand should make use of. While content marketing is a lot more cost effective than outbound marketing, it also generates three times as many leads and offers many other benefits.

Content is a key feature for growing businesses who want to survive in an information rich environment. Customers are looking for brands that provide value beyond their products so creating high-quality content can help you grab your audience’s attention.

In conclusion

Although there are many other factors that are involved in an effective marketing strategy, seeking out customers with a high lifetime value, providing them with a great customer experience while also providing them with valuable content is a recipe for success.

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Marketing Tactics

An ‘Outside-the-Box’ Approach to the e-Commerce Unboxing Experience

Get started by keeping three elements in mind – recyclable/re-usable packaging, personalised thank-you notes and free samples.

Daniella Shapiro

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With a predicted 24,79 million e-commerce users in South Africa by 2021, online shopping is here to stay, making it impossible to escape the predicament of perfecting the art of product packaging. It’s time to think outside the box when it comes to creating a meaningful unboxing experience. Get started by keeping three elements in mind – recyclable/re-usable packaging, personalised thank-you notes and free samples.

Recyclable/Re-Usable Packaging

Certain types of product packaging are having a tremendous negative impact on our environment, with 5.35 trillion pieces of plastic debris littering the world’s oceans, and with 269,000 tonnes of this amount floating on the surface – and plastic isn’t the only culprit. Did you know that it’s impossible for Styrofoam to ever be broken down completely? And that 1 million single-use coffee cups wind up in landfill every single minute of every day? These statistics make it obvious as to why it’s becoming so important for business owners to be more conscious about the type of packaging that they use.

Many business owners wonder if their customers really care whether their business is doing its part to protect the environment. According to Forbes and a 2017 Cone Communications CSR Study, the answer is a resounding ‘YES, they most certainly do!’.

87% of the consumers surveyed stated that they always have a more positive image of a company that supports social or environmental issues, and 88% claimed that they usually feel more loyal toward a company that they know supports social or environmental issues.

Thoughtful Thank-You Notes

The unboxing experience should be a unique and personal one, and it should be just as memorable as the experience of utilising the product itself! So, make it all the more special and build customer loyalty by including a personalised thank you note. Address the customer by their first name, thank them sincerely for their patronage and end off by giving them some helpful advice regarding the product, or share an interesting benefit of using it. Go the extra, extra mile by hand-writing the letter too.

Free Samples

Everyone loves getting free stuff. Why not bolster the unboxing experience by sending over a little bit more than expected? Not only will a free sample put a big smile on the face of the receiver, if they actually enjoy using it, there’s also a good chance that they’ll be coming back to order more. According to Shopify, free samples have the potential to boost sales by as much as 2,000%.

When it comes to packaging, make the right choice. Sustainable, thoughtful, memorable. Your customers, and the environment, will thank you for it.

 

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Marketing Tactics

The Facebook Ads Strategy That Can’t Lose

It’s a numbers game.

Entrepreneur

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Running a profitable Facebook Ads campaign is simple. Not always easy, but simple.

There is a formula that can guarantee a profitable Facebook Ad campaign. Once you know the formula and the values to plug in, you’ll never sink money into a losing digital ad campaign again. I know it sounds too good to be true, but stick with me…

The Guaranteed Growth Formula

Here’s the entire formula: CPA < AP

Were you expecting coefficients, remainders and dividing by polynomials? Nope, there are only two values that matter when assessing your digital marketing funnel.

1. CPA – Cost Per Acquisition

2. AP – Average Profit Per Client

If your Cost Per Acquisition, the amount you pay to generate a paying customer using Facebook Ads, is less than the Average Profit you make from each new customer you’re guaranteed a profitable campaign.

Calculating Average Profit

To get average profit per client, sum your total revenue from new clients and subtract what you spent to serve them. Divide the result by the total new clients. For example, if you made $75,000 from 10 new clients over the past year and it cost you $40,000 to serve them, your average profit is:

 ($75,000 – $40,000) / 10 = $3500 Average Profit Per Client

If your average acquisition cost for similar future clients is less than $3500, your campaign will technically be profitable.

Of course most businesses won’t want to spend all of their profit on acquisition. An average business can expect to invest at least 7 percent but no more than 15 percent of revenue in sales and marketing. If Cost of Goods accounts for 60 percent or more of total revenue, your low profit margin may make it difficult to afford successful advertising. Decrease operating costs by increasing efficiency or adjust your margin by raising prices.

Don’t make the mistake of calculating Average Profit based on revenue only from the first sale. Use at least six months of revenue or your lifetime client value as the basis for your calculation, or you risk underfunding your marketing and sales budget.

Related: Here Is Why Your Facebook Ad Campaigns Aren’t Producing Results

Calculating Cost Per Acquisition

Let’s assume you’ve considered all of your marketing and sales costs and determined you can spend $350 per new client on Facebook Ads. Let’s reverse engineer your ad campaign to see if a $350 cost of acquisition is reasonable.

The simplest Facebook ads funnel includes four metrics that build upon each other to determine your acquisition cost. I’ve included standard benchmarks for use as a starting point, but your results may differ:

1. Click-Through Rate (CTR) – Percentage of people clicking on your ad. Your CTR should be near or above 1 percent.

2. Cost Per Click (CPC) – The cost of one website visit. CPC should generally be below $3.

3. Lead Conversion Rate – The percentage of site traffic that becomes qualified leads. This value should be 20 percent or above.

4. Sales Conversion Rate – The percentage of leads that convert to a sale. Aim for sales conversion at or above 5 percent. (E-commerce companies often skip the Lead Conversion stage and have a Sales Conversion Rate of 1 percent or greater.)

If 10,000 people view your ad at a 1 percent CTR, you’ll get about 100 website visits. At a $3 CPC, you’ve spent $300. Since 20 percent of your traffic will become leads and 5 percent of those leads become closed sales, we can calculate that you’ll generate approximately 60 leads and three new customers.

Your estimated acquisition cost using Facebook Ads is $100 per client, which is well within your budget of $350. This cost may rise as you scale and target less optimal prospects, but as long as your acquisition cost is less than $350 you’ll make an acceptable profit.

Complex funnels can include several ads and conversion points, but the Guaranteed Growth Formula of CPA < AP still applies. There’s no immediate reason for concern if your metrics differ from the benchmarks. You can and should split test ideas for improvement if your numbers are far from what you expect, but don’t mess up a good thing until you’ve got a better one.

Optimising Your Guaranteed Growth Funnel

If unhealthy metrics cause your acquisition to cost more than what you’ve budgeted, start with these adjustments:

Click-Through Rate Too Low or Cost Per Click Too High

If your CTR falls far under 1 percent Facebook may stop showing your ads or show them to second-rate audiences causing your traffic to tank and CPC to increase. To improve your click metrics, adjust your ad copy (headline and body text), ad creative (image or video) and highlight the benefits in your offer.

Refine your audience. Tailor your copy, images and call-to-action to the audience you’ve selected and ensure that your audience has the desire and means to act.

Lead Conversion Too Low

If leads aren’t converting at 20 percent or more, either the promise made by your ad isn’t congruent with your landing page, or the process of moving forward is too difficult. Try using the same image and headline in your ad and reduce the form fields in sign-up forms to the bare minimum. Also try retargeting visitors who don’t sign up with ads stating the benefits of acting now, or with a different offer.

Related: Staying Relevant In The Facebook Age Of Meaningful Social Interactions

Sales Conversion Too Low

If you’re an Ecommerce brand with sales conversion below 1 percent your shopping cart or sales process may have too much friction. Simplify the sales process to decrease clutter, or increase trust by adding testimonials and trust signals near important calls to action.

Your sales process may need improvement, but that is beyond this article. In the meantime, you can still increase revenue by cross-selling and upselling those who convert. You may also improve client retention with recurring contracts. Yes, that’s why many software companies are switching to cloud-based subscription models.

When used properly, The Guaranteed Growth Formula of CPA < AP makes Facebook Ad marketing an investment, not an expense. Using the formula, the most you should ever risk is a small initial budget to test whether your estimated calculations hold true in practice.

If your net profit is 3X your acquisition cost, your funnel returns $3 for every $1 you invest. Instead of asking “How much should I spend on marketing?” The question becomes, “How much do I want to make?” I’ve built a Facebook Ad Growth Calculator that incorporates the Guaranteed Growth Formula to help execute your growth strategy. Input your revenue goal and it will estimate the Facebook Ad impressions and traffic required to reach it.

This article was originally posted here on Entrepreneur.com.

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