Low Cost Marketing Tactics for Small Businesses
Bruce Kupper, Founder, President, and CEO, Kupper Parker Communications, Inc.
The meek shall inherit bankruptcy. At least that’s what we would say at the agency I founded in 1977, Kupper Parker Communications Inc., when advising the small businesses that were our bread and butter during our first 20 years. Small businesses that don’t approach promotion aggressively can’t look to an alternative. It's a daunting challenge today to be a small business. You generally offer a select group of products or services in a secondary location with minimal exposure and virtually little or no advertising to support the need for a daily influx of prospects.
So what’s a small business to do? To some degree, your challenge is similar to that faced by countless chain managers day after day: how are you going to stand out in a marketplace inundated with competitors? Well, there are excellent tactics for competing with limited resources. How limited? As a rule of thumb, you need a marketing budget of at least $12,000 a year, or $1,000 a month, or you’re not in business. Another gauge is a budget of two percent to four percent of anticipated sales.
With that budget, you’re aiming to garner as much traffic as you can, and to do that, you must strive to look bigger than you really are. In broad strokes, your tactics should include setting up a Web site and mining your existing customers while prospecting for others like them. When you want your business to grow more rapidly, you must then turn to advertising. What follows is a look at the effectiveness and cost of each tactic.
No small business today should be without a presence on the Internet, the 21st Century equivalent of the directory and the calling card. People like to use Web sites to gather basic information. For an investment of $1,200 to $1,500, you can create a functional, albeit barebones, Web site to represent your business. It need not be extensive. Four or five pages are sufficient for the necessities, including a brief history of your business, a solid description of what you do, where you do it, and how people can either get there to see it for themselves or contact you.
It’s critical that your Web site accept e-mails and that you go to your site daily to answer requests for information. As you expand, you can add functions such as the ability to collect and send information, which would bring the total cost to $3,000 to $4,000. At some point in the future, you may want a site that handles all of the transactions involved in e-commerce, bringing the total cost to $8,000 to $15,000.
But that’s getting ahead of the story. For now, you’re really small—a local wine store, a gift shop, a tax accountant, or a neighborhood restaurant. Start with your customer database, which is as important to you as the blood coursing through your veins. It costs you a tremendous amount of money and effort to identify interested prospects and supporters. These people need to be coddled by consistent contact.
In this interactive age, email has made reaching out a lot easier. Criticisms aside, your e-mails are not “spam” to the vast majority of your customers. These individuals have an investment in your concept and would welcome hearing from you 99 percent of the time. As an alternative, send postcards, the physical equivalent of email, through regular mail. Either way, examples include the following:
- The restaurant that celebrates a customer’s birthday.
- The gift store that alerts a regular that a certain kind of collectible has just arrived.
- The accounting firm that reminds the client of the need to get taxes going.
- The florist that has a special arrangement on the roses a customer loves to bring home every week.
I could go on and on, but you get the point. You can protect your customers from interlopers, and even get them to buy more, and more frequently, using your database information appropriately and inexpensively.
Next, look beyond existing customers for others like them. As much as email and postcard mailings are tools for keeping customers, these tactics can also be used to contact additional people with a similar shared interest. Groups and clubs are often ignored by small businesses, yet they are hotbeds of opportunity for developing customers. Again, here are some examples:
- You own a wine store, so you invite a club or a social group to a tasting event.
- You sell horseback-riding supplies, so you host an open house for an equestrian club.
- You’re an insurance broker with a client in a certain neighborhood, so you invite the neighbors to learn more about protecting their families.
None of the information that enables you to extend your reach is costly or difficult to collect. Membership rosters exist for most organizations. A direct-mail company, or even your local post office, through myriad list companies, can supply you with name lists by carrier route, zip code, home ownership, and other measures. For the direct-mail uninitiated, a “carrier route” is the postal carrier’s route, usually consisting of anywhere from 600 to 1,000 homes.
As for cost, lists range in price from $15 to $25 for each 1,000 names. Most small businesses don’t need more than 3,000 names, so that’s $75, tops. To send promotional materials to customers and prospects, figure that e-mail is virtually free, whereas postcards require a nominal sum for paper and postage. Even better, once you pursue this type of contact, you can almost triple your response rate by following up with a telephone call.
Once your business concept is working and you’re ready for more rapid growth, you might replace database mining, which is time-intensive, with advertising. In essence, you’re trading your money for time. Contrary to the prevailing wisdom, advertising doesn’t have to be expensive. There are affordable alternatives that, while not without cost, offer your business a better-than-average opportunity to compete against larger operations. Winning venues include regional sections of major newspapers, local cable television, and testimonials on radio. Each can help a small business extend its reach while operating with a modest promotional budget.
Every daily newspaper in cities of any size has sections based on geographic considerations—often as simple as a North, South, East, and West section. The bottom line is you can advertise there for 20 percent to 40 percent less than the cost of an ad in the full newspaper—typically, $500 as opposed to $1,500 to $2,500—and also target the specific area in which you trade. While saving your business money, you will also be maximizing the probability of getting a good return on your expenditure. You might even be able to afford a larger ad that will make yours look like a bigger and stronger company in your geographic area.
Although newspapers can be pretty straightforward, the thought of advertising on television intimidates many small business owners. Yet the truth of the matter is that cable TV is easy and flexible and offers these establishments the opportunity to look more successful. Viewers generally don’t understand how easy broadcast can be, so they are more readily impressed. Thus, they consider businesses that advertise on TV to be more successful and vibrant. No matter what the truth about yours, the perceptions generated from this type of marketing will usually yield positive results.
The cost will also likely fit your budget. Most cable television operators will let you use their production facilities at no cost to make your commercials if you agree to buy a certain number of ads. They are also able to divide markets into smaller segments, allowing you to tailor your message to specific geographies. Buy about 30 ads—which will cost $1 apiece in small markets, $25 to $50 in mid-sized markets, and $150 in major markets—and try it for three months. A few thousand dollars on cable will appear to look like the spending of tens of thousands of dollars from a large competitor.
Small businesses serve their interests well when they focus on dominating an area or group. Any time an establishment can gain an upper hand on a marketing vehicle, it maximizes its opportunity to get a recognizable return from its efforts. Testimonial advertising on radio—whereby you hire an appropriate on-air personality, such as a disc jockey, sportscaster, or weather person, to represent your product—works especially well for this reason.
With a personality speaking for you—and barred from doing so for competitors in the same space—you gain instant credibility. Although your cost will be determined by your spokesperson’s reputation, you can, in some markets, spend as little as $25 or under for a personality-sponsored ad. What’s more, you only need to purchase about three commercials a week. A rule of thumb holds that recent advertising is more critical than frequent advertising. What’s key is the message, not the number of commercials. After a few weeks of broadcasts, it will appear that your spokesperson has been on board for your business for months.
When utilizing the exclusive nature of your spokesperson and the endorsement he or she provides, moreover, you don’t need to stop with the radio ads. An autographed photo from the personality for your store or location will be a nice reminder of the campaign. Oftentimes, the personality will allow his or her name to be used with point-of-purchase materials or in an e-mail blast to the radio station’s own database.
Tactics to Avoid
When advertising, don’t make the mistake of employing tactics just because they are cheap. Affordable advertising is sometimes ineffectual for small businesses, and thus should be avoided. Items such as throwaway tabloids or free newspapers are generally in line in terms of worth with the prices they charge their subscribers and readers—zero. An ad in a high school or college yearbook amounts to little more than a charitable donation. As for sandwich boards, poster boards, and mobile signs, all of which have their proper uses, these vehicles are generally inappropriate for small advertisers unless they are placed right next door to the establishments.
In sum, small businesses can employ many reasonably priced promotional tactics to get the attention they need. The key is to be aggressive about pursuing those that make the most sense for your business. If you think a certain promotional activity might bankrupt you, then by all means turn to a more affordable and appropriate one. Unlike the phrase, “What happens in Vegas stays in Vegas,” you do not need to gamble away your promotional efforts. Proper promotion is not without risk, but the odds are heavily in your favor day in and day out when you activate efforts like these.