Or pay $10/month.
Or pay $12.50/month
With the SuperBowl this weekend, it's an approriate time to ask how well your advertising is working. According to the Concerned Scientists
Most of that is directed to bringing new customers in the door - but that door swings both ways. Customers don't just come, they go. Studies show that it's 5 times as profitable to spend money on customer retention than customer acquisition. Part of the reason is that advertisers are stupid, and they don't realize that it's a lot easier to make more sales to your existing customers, than to get new customers.
John Wanamaker founded the first department store in the US. According to legend, he hired an MBA who, after a few days, rushed up to Wanamaker with the startling revelation, "Half the money we're spending on advertising is wasted." Wanamaker was unperturbed. That's hardly news, he said. The question is which half?
Wanamaker admitted being stupid about the advertising he placed. Modern advertising agencies make no such admission. They engage in research to determine who sees the ads, and who remembers the ad - but still ad campaigns fail, and often fail miserably. After spending $929 million in taxpayer funds over 5 years, Drug Czar John Walters asked Congress for continued support for his office's National Youth Anti-Drug Media campaign - despite a report evaluating the campaign as a failure. It "isn't reducing drug use", Walters told the Wall Street Journal.
This is your ad budget.
This is your ad budget fried to flinders.
Any questions?
Advertising effectiveness is easier to measure online than in traditional media. When someone clicks on a link, the browser reports the referring URL. That may not be sufficient, however. When someone sees a banner advertisement for Quicken Loans, he may not click on the banner, but may visit the website later. Why? Because he is in a hurry at the moment, or because he wants to explore the site when he's in more private surroundings.
Additionally, there's a cumulative effect. Teenaged boys have a preference for one brand of beer over another, long before they taste beer for the first time. Auto companies discovered in the 1960s that advertising flashy red convertibles was more effective in drawing consumers into showrooms, even if they intended to buy a conservative sedan.
Still, there are things you can do to improve the effectiveness of your advertising - and improve your customer retention rate.
I've never read anywhere that effective advertising is a multi-step process. maybe this is a concept I invented. However, I figured this out in the 1970s, and it seems to be a good strategy.
In the 1970s, I was single - and I was frustrated trying to meet women in bars. It seemed like there were only two types of women there: ones who arrived with a boyfriend, and drunks. Instead, I started attending churches, figuring that the odds might be better there. They were, but that didn't make it an easy formula for meeting women.
Jerry Clower used to tell a story a story about performing in a church that turned out to be snake handlers. He got nervous, there in the front of the church, when they started passing around the rattlesnakes, so he leaned over and asked where the back door of the church was. Ain't none, was the answer. "Reckon where do they want one?" Jerry asked.
It wasn't quite that bad, but I definitely felt uncomfortable in some of those churches. Perhaps the better Clower story was the one where the hunter found himself in a tree, fighting with a coon. He yelled to his friend to shoot into the tree. "I can't do that," his friend said. "I might hit you!" The hunter yelled to shoot anyhow, because one way or the other, either he or the raccoon needed some relief.
When I had a newspaper, Betty started a craft shop in her garage. She advertised the name of her store for a few months, along with her address, and her hours of business. Finally, she ran an ad announcing "Everything in the store, 50% off this week".
A month later, I asked Betty how things were going, and she was glum. She paid about 50 cents of the dollar for her merchandise, she said, so when she sells for 50% off, she's selling at her wholesale cost, taking a loss on shipping, and on her other overhead costs. It'd have been worth it, she said, if she'd attracted a lot of new customers, but there were virtually none. Instead, she found that her regular customers stocked up - and after a week in which she was selling below costs, she'd had several weeks in which she had virtually no customers at all.
I talked with her a while, and she decided to offer offer DMC floss, not for 50% off, but for free, but just one color, and limited it to three per customer. When I checked back the next time, I found that she was exciting, because that offer had gotten many people to visit her shop, people who had never been there before, and some of them had started to buy from her regularly.
What's the difference? When she offered 50% off, people were skeptical. After all, many businesses put an uncompetitive prices on their goods in order to offer fictitious savings. Nobody is fooled - and in this case, nobody bit, even when it was very legitimate savings.
But "free" is something anyone should be able to understand. Betty's problem was getting crafters to sample her craft shop. Having sampled a number of bizarre churches, I could understand their reluctance to entering a strange store. You feel uncomfortable leaving without buying anything - perhaps not so uncomfortable as to create a new back door for the place, as Jerry Clower offered to do, but still uncomfortable.
JCPenney can succeed with a 50% off sale, because the bulk of their potential customers are familiar with JCPenney merchandise and pricing. Small businesses, however still need to make friends before they can make sales. This should be obvious to us all. You don't, after all, walk up to a stranger and say, "Hi, would you marry me?"
Even though few men do that, they still haven't figured out how to approach women. They think they need a "line". Lines are like slogans: they don't work. You need to open a conversation with someone you'd like to meet. The only really good "line" goes something like Hi, my name is ___ and I'd like to get to know you. Once you talk for a while, you may then have enough of a "foothold" to suggest adjourning to a nearby coffeeshop in order to continue the discussion in comfort, and from there, suggest further social activities.
Tinker to Evers to Chance. Stranger to Friend to Customer. It's not impossible to make an unassisted double-play, or even an unassisted triple-play in baseball, and it's not impossible to sell to a stranger. If you have a bunch of umbrellas on the street, with a sign indicating an attractive price, a sudden unexpected squall will produce a few sales. On the other hand, if you're there every day, and people have walked by you a hundred times, you'll probably sell more.
Online, it's cheaper. You don't have to give away merchandise to get people to visit your website. In fact, giving away merchandise may be exactly the wrong thing for you to do. Potential customers wonder what's up your sleeve, and if they can't find anything else, they figure it's identity theft.
I recently decided to give the Prize Patrol an opportunity to park in front of my house and deliver a 6-foot-long check to me. I went to the Publisher's Clearing House website. I just wanted to order a couple of magazines (and yes, I know that ordering magazines doesn't make me more likely to win) and get my name in the barrel. However, when I tried to complete the order, they kept asking more and more questions, and more and more windows kept popping up.
Hint: people don't like windows that pop up. That's one reason why Firefox and SeaMonkey became so popular so fast: tabbed browsing.
They don't like spam, either, which means they aren't eager to give you their email address. The solution isn't to ask them for anything. Instead, you offer them something - an RSS feed. Instead of you shoving newsletters down their throat, they can fetch your newsletterblog posts to their desktop.
And blog posts offer a wonderful way to make friends. For 35 years, the Shane Company has advertised "Now, you've got a friend in the diamond business" and while it's a so-so slogan, it's a very effective mission statement for your business. Why isn't it a good slogan? Because sloganeering doesn't make you a friend. Friends talk with, while slogans talk at you.
That's the other big difference between newsletters and blogs. It's hard to write back to a newsletter - but most blog software is designed to allow customers to kibitz.
Normally, I don't end my posts by exhorting readers to contact me and buy something. I figure that the blog indicates that I'm approachable, and the rest of the web page indicates that I offer hosting services. That's probably a mistake on my part. Among other things, those using an RSS reader don't get the rest of the web page.
They were talking today about John Edwards on the cable news channel. He's not interested in running as Vice-President this time around, they suggested, saying that his attack on Hillary Clinton's Iraq stance would keep him from being offered that position. (In case you missed it, he said, "If you're in Congress and you know this war is going in the wrong direction, it is no longer enough to study your options and keep your own counsel. Silence is betrayal. Speak out, and stop this escalation now. You have the power to prohibit the president from spending any money to escalate the war - use it.") Edwards' campaign is different in other ways as well. He's not promising lower taxes, as politicians always do, but telling people that the programs he proposes will mean paying higher taxes.
When someone asks you to sacrifice, when someone asks you to be better than you are, it's a compliment. It's telling you that someone thinks highly of you. It could work for Edwards. Goodness knows, I'm tired of politicians who talk about how great America is, and act as if it wasn't.
I think it was Dorothy Parker who told of retiring to her sleeper on a train when a man she'd met on the train, who had the upper, passed a note from his compartment to hers, with a proposition. I didn't know whether to honored by the offer, she said, or if she should correct his poor grammar and pass the note back.
My wife has an excellent set of knives; I won't be making any of those offers. On the other hand, in general, it's nice to be asked. If I can help you establish or promote your business, or if I might provide a hosting solution, I would be honored to assist. Please contact me at your convenience.
