To fully understand the enormous growth potential marketing can bring, you need to understand these marketing laws and principles. These marketing laws and principles are the foundation for increasing sales without spending more on advertising that doesn't work. Once you have accepted these marketing principles, and implement them in your business over the following weeks and months, you will see a huge impact on sales and revenue So let’s dive in and look at these 12 essential marketing principles and laws in your business.
1. Don’t Advertise Your Business - Market It.
Generally marketing is the area business owners know the least and therefore do the least of. This is unquestionably one of the major untapped areas of your potential profit growth. You have to spend 50% of your time, investment and effort into marketing and sales - finding and keeping customers.
The mistake many businesses make is to associate Advertising with Marketing. Most business owners believe that marketing their business means just paying for a few ads in different advertising mediums. What very few understand is that marketing and advertising is two different things. Too many clients have come to us only after they have wasted large sums of money by copying their competitors with “me too” advertising. And the media and advertising agencies love it.
Marketing of a business extends beyond the actual advertising of the business. It also includes the customer relations as well as the sales process within the business. Marketing is everything that is done to let the potential customers know they should become YOUR customer by buying YOUR product or services. It is not only about having the right offer, but also about sales scripts, training of sales staff, the way you package your products and services to increase the sale. It’s about creating your competitive edge, your Unique Selling Proposition, increasing the perceived value of your product and increasing your profit per sale through your pricing. This means that every decision made within the business needs to have the customer at the focus. In the marketing laws and principles we give you the "fundamentals" of making your business more successful without spending more or working harder.
But don’t let marketing intimidate you. At its core, it’s really not much more than common sense. Marketing is everything that is done to let the potential customers know they should become YOUR customer by buying YOUR product or services. Marketing can therefore be considered as everything between determining the customer’s needs, and generating profit through delivering those needs. That’s the basis of marketing and simple once you break it down to its core.
Marketing is one of the most important parts that you need to. Understanding your business and developing an appropriate marketing plan are vital to the success of your business. It should be designed in such a way that when delivered, your customers’ needs have been efficiently met. In the last decade or so, the importance of business marketing has increased dramatically, as the Internet and social media has created a whole new era in business. The competition and urgency among businessmen has also increased due to the fact that more new competitors are entering their markets than ever before. Our current economic challenging climate doesn’t help either. Only the strongest and smartest business owners are going to survive.
2. The Truth About Advertising:
Advertising seems to be everyone's favourite when it comes to wasting money on marketing. There are many more effective ways to market your business than just advertising. In my experience, advertising can be one of the most expensive marketing options, and that businesses depend too heavily on advertising, when there are many more effective ways to market. By understanding and implementing the marketing laws and principles you'll always be looking for more cost effective marketing strategies before selecting advertising.
The only organization that benefits – whether your advertising works or not – is the media company you use. They’re always ready to invite you to participate in special deals and supplements. And they’re pleased to give advice on how to structure your ads “to get results.”
But ask them to do a deal where you pay an amount per inquiry, and you’ll be met with stony silence. How many times have you been contacted by a newspaper or radio representative and asked how your advertisement worked?
This does not deny the value of advertising. On the contrary, marketing is one of the best ways to increase your sales. What is dumb is spending on advertising that does not work. You can learn how to create marketing campaigns that do work, and you can test the results.
There is a standing joke in the industry that 50% of your marketing money is wasted. The problem is identifying which 50% it is! In fact, the 50% estimate is being generous. It’s probably closer to 100% that’s wasted – and at least you know which 100% it is…yours!
3. You're Sitting On a Goldmine:
Today I want to focus on one of the most overlooked elements of marketing success, your communications with your existing customers. Most marketing efforts focus on acquiring new customers. But I've yet to find a business that is maximizing its marketing to its existing customers.
I would take this a step further. When I start working with a new client, I know without a doubt that they are sitting on a goldmine. This goldmine consists of the wealth that is hidden in their relationships with their current customers.
How do you access that goldmine? By answering these questions:
- What do you have to offer your existing customers?
- When did you last let them know?
- What are you not offering existing customers that you could be offering them?
- When did you last send a letter to your customers?
- When did you last email them?
- Did you measure the response?
- When did you last call them?
- What would happen if you doubled your contact with them this year?
- When you do communicate with them, what more could you be doing to clearly explain the specific benefits that they will experience?
There was a business who generated 500,000 by sending a brochure to their clients once a year. They were asked what would happen if they sent the brochure twice a year. The thought had never even crossed their mind. They did it (and a lot more) and it generated a fortune for the business.
This is not an unusual story. We are all so close to our businesses that it is often a challenge to step back and look at the obvious - the elusive obvious.
Here are some more useful questions: How often do you communicate with your customers by direct mail? Do you test and measure the response? Do you spend at least 15 minutes each month thinking of an exclusive offer you can make to your existing customers? Do you say 'thank you' to your customers either by letter, email or telephone? Do you ask your customers for referrals? Did you know that there are more than 90 ways of getting referrals?
There are hundreds of great marketing strategies for getting new customers. But before that, you need to nurture your relationships with your existing customers. It is the first key to the goldmine.
4. Customer Share vs Market Share:
Here is a new and different approach to customers and customer service. Go for Customer Share, not Market Share:
What is market share?
Market share is where you are trying to sell your product to as many customers as possible. Here you focus on getting as many new customers as possible.
What is customer share?
Customer share is where you are trying to sell a single customer as many products as possible, over a long period of time and across different product lines.
Now your goal is to ensure that each customer who buys your product buys more products, more regularly, buys only your brand, and is happy with it. That’s working for share of customer not share of market. In this increasingly competitive business world we live in, customer loyalty is everything. Finding new customers will be one of your biggest expenses for doing business. It will cost you even 5 times more to attract a new customer than it will cost you to bring one of your past customers back to you. Stop thinking of customers as on-off deals. Think of them as volume deals. Your job is to turn up each volume deal. That means thinking beyond today’s purchase to those in the months and years ahead. It also means recognizing that each future transaction depends on that customer’s satisfaction with the previous one.
5. Don't Be Like Everybody Else:
In order to succeed in a business you cannot be like everybody else. You need to stand out from the crowd. Always keep in mind that you don't want to be "just another fish in the sea." You want to be the biggest, brightest and fastest fish in the sea! Today it's not the business with the best product or service that WINS, but the business with the best marketing that wins. You need a way to get customers EXCITED about buying from you and forgetful of your competition, something that will weld them to you with a loyalty that cannot be broken. So how do you do this? What you need, my business friend, is a USP - UNIQUE SELLING PROPOSITION.
Your USP (Unique Selling Proposition) will make or break your business. It’s the thing that sets you apart from your competitors. It’s the thing that lets your potential customers know they should become YOUR customer by buying YOUR product or services. The determination of a unique selling proposition (USP) is the starting point of all successful marketing, advertising and sales.
Little word, big meaning. Ignore it and you may as well throw your marketing money out the window. Unless you market on some sort of ongoing schedule, you’re wasting time and money.
For example, suppose you’ve opened a new floral shop in town. You decide to run an ad in a local newspaper because your research has indicated that your target market reads the local newspaper. You don’t want anything too small, so you run a 1/3 page color ad in the May issue to coincide with your shop opening. Because you’ve spent more than you should, you don’t run anything else till November — which means you’re counting on the local newspaper readers reading both May and November, seeing your ad both times, and remembering it over six months and two seasons. Long shot!
A better approach would be to run a series of smaller black and white ads over a six-month period. Run every other month or three months in a row. Or find another publication with lower ad rates. Or do some highly targeted direct mail — very cost effective.
The goal is visibility. It’s hard to achieve without a consistent message. So, keep sending the right message —to the right audience — consistently. And watch your business grow.
The most effective element in marketing and advertising is consistency. If you reach 1000 of the right people ten times, rather than 10 000 people once, your return on your advertising investment will be much higher.
7. Marketing Is An Investment:
Think of marketing as an investment and not as an expense, and of customers as something you buy. The general idea is to create some sense of the value of a marketing investment, a "measure" so you can compare one marketing program to another. This is why measuring your results is so important, to find the cheapest way to buy customers. Your marketing objective is to buy customers for less than you spend on your marketing investment (Customer acquisition cost). The only effective way to measure the success of your marketing is by the size of your profits. I have seen many businesses break their sales records while losing money in the process. Profits are the only numbers that tell you the truth of the success of your marketing.
Customer acquisition cost is the cost associated with convincing a consumer to buy your product or service, including marketing, and advertising costs. It is the total cost for acquiring a customer. This can be considered as the cost for buying a customer. Yes, buying a customer!
If you look at your efforts for finding and keeping customers as “buying a customer” your whole perception of customer service and marketing changes. This means you can buy as many customers as you want, as long as you know how much they cost you and that you can buy them for less than the profits you make.
8. Customer Lifetime Value:
Many business owners miss the point when it comes to understanding the value of each and every customer. Considers a customer as a source of your lifetime income and as the measure of your business success. “Lifetime Value” is all about how much a customer spends in your business over their lifetime as a customer
The biggest mistake most businesses make is working like crazy convincing a new prospect to become a customer, and then forgetting all about them as soon as they make a sale. This is a mistake because in any good business you will make your profits by increasing sales with existing customers.
It is six times easier to sell to an existing customer than to a new customer. Having made a sale to a customer, you have a relationship and have increased their trust in your ability to satisfy their needs. That’s why it makes sense to work on increasing your conversion rate from inquiries to sales, increasing the average transaction value and increase the number of times a customer buy from you.
Your goal should be to create customers for life. You are better off investing in your current customers and farming new business from them than you are trying to chase down new clients.
“The purpose of a business is to find and keep a customer and your Profits are a measure of how well the company is fulfilling its purpose.”
Why is it so important to you and your business?
Knowing the Lifetime Value of your customers is crucial to you and your business as it serves as a benchmark without which you'll be groping in the dark. When you know the Lifetime Value of your customers, you can determine how much time, and money you can afford to invest to acquire a new customer.
In other words, you can invest more today to reap a much larger profit later down the road as long as your cash flow is healthy and can support it.
Every marketing method costs you money and bring you benefits such as increased sales and profits. But how can you be sure that the benefits would outweigh the costs or investments? This is where knowing your Customer Lifetime Value is so powerful - it helps you to predetermine your ROI before you launch your marketing campaign.
How to calculate your Customer Lifetime Value:
For example: Suppose you have 100 clients who each spend an average of R2500 per year with you and your customers deals with you for an average of 3 years. Forgetting about inflation, each customer has a lifetime value to you of R7500.
The Customer Lifetime Value can be calculated as: 2 500 × 3 years = 7 500. What this means is that over an average customer lifespan of 3 years, each new customer you could acquire and keep is worth 1 875 to you in profits, at a 25% profit margin.
Just a 5% increase in customer retention (stop existing customers or clients leaving) produces a 25% to 100% improvement in profit. To put it another way, it pays to look after your clients.
Using the sample above, suppose that you have a customer loss rate of just 10% each year. Therefore, a 10% attrition rate is costing you 75,000 in potential future revenue each year.
9. Not Every Strategy Will Work:
Not every strategy you try will work for you because it’s largely trial and error. You will have to go through some trail and error to discover the best formula for your business. Constantly try new strategies, and you will find a strategy, which works, for you and your business.
Therefore, you must understand the concept of recording your results and analyze them because every little step brings you closer to the right formula and approach and further away from failure. Successful business people and marketers aren’t necessarily the smartest or most pioneering people; they just understand the concept of recording and analyzing results.
It may be extra work and much more effort, but at the end of the day you will know what works and what don’t work. Remember that successful marketing requires persistence, tenacity and patience. And not every marketing tool is right for every business. So experiment. Do some testing to see what works and what doesn’t. Let yourself make mistakes. You’ve got the tools. Now go for it!
10. Success Is a Number’s Game:
You can predict your business future profits and growth by weigh, count and measuring the results from your marketing efforts. It’s very important to monitor the results from strategies and actions you are implementing. If you find that the results are not to your liking, there is only one place to look. Your actions, that's it. Action creates results.
“What cannot be measured cannot be managed”.
It is absolutely important that you measure the success of all your marketing activities. Successful marketing often results out of trail and error, you can minimize your “error” by developing what works and discontinuing what doesn’t. We cannot overemphasize the importance of testing and measuring results.
You will have to go through some trail and error to discover the best formula for your business. Constantly try new strategies and you will find a strategy, which works, for you and your business. Not every strategy you try will work and if you don’t know what is working and what’s not, you can't improve on it. That’s all weigh, count and measure is. It’s about finding out what produces the best results and what doesn’t, then making decisions based on that. Depending on these results you then take corrective action by implementing another strategy or try something new to improve results
The process of taking action, measuring, revising and measuring again will go on as long as you’re interested in improving the profitability of your business.
11. Target Your Customers:
Many companies fail because they are targeting the wrong market with the wrong product in the wrong way. Target your customers – never try to appeal to everyone. Focus specifically on those people you know will benefit from your services. A specific focused target of people in the market, who are willing to buy, is 20 times more powerful and will give you a 1000% increase in response from your ads! If you know exactly who will be interested in what you’ve got to offer, and you make an offer that is compelling, you will increase your response with another 300%.
Market success comes from concentrating single-mindedly on selling to those customers you have segmented as being the ones who can most benefit immediately from the unique product or service features you offer in your area of business. The best high-profit strategy is to dominate a specific market niche with the best product available for those customers in that niche. Concentration on high-profit market segments with high-profit products and services gives the highest return on sales, return on investment, and return on equity. To see your marketing efforts pay off, make sure you’re sending the right message to the right audience, consistently.
12. Know Your Customers:
Understand the needs of the customer and give them exactly what they want. Knowing your customer, his needs and concerns, will place you in a position of power, as you will be able to offer solutions, products and services that your customer needs. It’s your job to take care of your customers—to feed them. But what should you feed them? Ask them exactly what they want, and feed them exactly that.
Is your product or service better, more efficient, cheaper, better value for money or more accessible than your competition? If the answer is ‘Yes’, you can readily win over the type of good client they have. If the answer is ‘No’, then fix things now! Your success will depend largely on finding those people who are not (but could be) your clients/customers, understanding why they are not your clients, finding out what it is you can do to change this situation, and nudging them regularly and relentlessly into buying from you.
Know your competition:
To succeed in your business today, you need to know as much about your competitors as you do about your own business. Unfortunately, many small business owners make the mistake of waiting until a competitor has opened up a shop across the street and is cutting into profits to find out who and what they're up against.