Five Reasons To Advertise
All The Time
By Tom Egelhoff
 Reason
1. Customers Forget. Did you happen to see an ad today for
Coke? Pepsi? McDonalds? Burger King? Wendys'? I'm guessing you
probably did or at least someone in your family did. The reason
for this question is why? Isn't the hard work done? These companies
have certainly established their brand names.
In the case of Coke it's arguably the most well known brand
name in the world. So why not cut back on the advertising a little?
Put some of that ad money to the bottom line or make the stockholders
happy with an extra dividend. The reason is very simple- We the
customer forget without constant reminders. Each day a customer
doesn't hear about your company is one more day they start hearing
about your competitor.
Reason 2. Name Recognition. When a customer thinks
of a product whom do you want them to think of? Target? Wal-Mart?
Or you? It's pretty hard for them to immediately think of you
if they don't see your name anywhere.
Reason 3. People often take their time when buying.
I often use a laptop when I travel and the time is coming for
a new one. So I'll be shopping for that. Am I going out to buy
it tomorrow? Probably not. I'll start watching the ads studying
the available brands and assembling the features I need. I may
not make the purchase for several months but when I do I will
probably have a dealer in mind and they will get a shot at my
business.
Reason 4. Customers move. In my hometown of Bozeman
it's estimated that the population of the town completely turns
over every seven years. Part of the turnover is we are a college
town. Studies show that 25% of your customers will move each
year. A tip I have given for years is to have a yearly "Grand
Opening" to attract that new 25% percent who move to your
selling area each year.
Reason 5. A portion of the market is always shopping.
Did you notice the tire ads in the paper today? If you need tires
you did. If not you probably didn't give them a second glance.
Not everyone is your customer every day. But each and every day
there is a portion of the population that is looking for your
product. And you need to be there when they are ready to start
looking for that product.
The next question is how much to spend and where? One of the
most asked questions I get at seminars is, "How much do
I spend on advertising?" A loose rule of thumb is 2-5% of
gross sales. That's easy to compute but the problem is that when
sales are down advertising has to come down too and that's not
good.
Instead, consider this. The 80-20 Rule. We all know this rule
right? Eighty percent of your business will come from 20% of
your customers. So why spend money advertising to the 80% that
don't produce anything? Let's say for the sake of easy math that
you have 1,000 customers and spend a $1,000 to reach them. Each
dollar spent on advertising, in your media of choice, brings
in an average of $1.10. So you make a 10% return on your advertising
investment.
Now let's say that after examining your customers and truly
defining them more closely you find that half of them are bringing
in $8.00 in profit for each dollar you spend. What if you advertised
to just 500 of the 1,000 customers who are spending more at a
price of $2.00 each and not advertise to the remaining five hundred?
You are still spending only $1,000 in advertising but you are
getting a return on investment of 400% because you are reaching
the right target market in the right media for the same dollars.
Which do you like better?
As you can see, it pays to know your customer, where they
are and how to reach them. You don't have to match the big guys
dollar for dollar in your advertising. It's not getting more
customers it's getting the right customers. Be where they are
as often as your budget allows. For some businesses that might
be newspaper, others TV, radio or direct mail. For some it might
be all of the above. And the best part these higher-end customers
talk to each other and make strong recommendations to their friends.
Based in Bozeman, MT, Tom Egelhoff is the author of How To Market, Advertise & Promote Your
Business Or Service In A Small Town, and The
Small Town Advertising Handbook: How To Say More And Spend Less.
He is also a seminar and workshop presenter and trainer.
© 2004 Lee Enterprises
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