Marketing
Without Advertising: Book Review
http://www.powerhomebiz.com/vol54/marketing.htm
A new book contends that advertising does not really work. Instead, personal recommendation is the best strategy to attract and keep customers. Here are 10 steps on how to develop a successful, low-cost marketing plan that is not based on advertising:
by Lyve Alexis Pleshette
Senior Staff Writer
As an entrepreneur, you must understand that what counts is not what your business says about itself, but rather what others say about it. A new book written by Michael Phillips and Salli Raspberry entitled "Marketing Without Advertising" provides valuable lessons on how to ensure the success of your business by inspiring customers to rave about it.
The book's basic premise is that promoting personal recommendation is a superior, yet often overlooked, strategy to attract and keep customers. The authors contend that advertising, which they define as " broadcasting your message to many uninterested members of the public," doesn't work. Its expense often does not compensate for the results; and the customers that are lured by advertisements are often not loyal.
Instead, Phillips and Raspberry argue that a crucial element in any good marketing plan is based on customer trust. Personal recommendations are what works, and not advertising. Other people's recommendation is a very powerful factor that could improve the profitability of your business. Plus, they are more cost-effective than advertising as the customer who is referred comes to you at a lower cost.
The authors recommend 10 steps to help you develop successful, low-cost marketing plan that is not based on advertising:
1. Offer the best and up-to-date product and service. To make people recommend your business, they have to know and be convinced that you are offering a top-notch product or service. In addition, they need to know what sets you apart from others in your field.
How will they know this? Well, you have to tell them yourself (without sounding egotistical). While they can probably see this in the way you run your business, you also need to make an effort to give your customers information that allows them to judge the quality of your business for themselves. If you are offering financial advice, for example, you may want to point out to your client that while 15% return for a type of investment is considered excellent, you have done substantially better than that for his account. The customer will appreciate you much better for that.
You can also have someone they trust tell them how good your business is. Positive reinforcement from a trusted person can be extremely effective.
2. Create easily understandable business description. If getting personal recommendation is a key part of your marketing plan, your customers must be able to communicate to others what it is that you really do. You must provide them with the general kind of information about your business so they can tell others about you. After all, you do not want customers misrepresenting your business. Instead of gaining new customers, you might hear comments like, "I thought you were doing this-and-that, because so-and-so told me." From positive recommendation, your job will now turn to damage control.
Your first task, therefore, is to articulate a clear, easily understandable statement of what your business is about. Think this is easy? The authors discovered in their study that the business owner who can clearly communicate what he or she does is the exception. Many business owners are vague about what they themselves do.
The authors recommend that the place to start is to develop a clear understanding of the broader domain in which your business functions. You need to define the range of domains in which you can legitimately sell what you do.
If you are manufacturing cooking pots, for example, saying that you are in the business of making cooking pots is only half of the story. In order to create a meaningful description of your business, you must take the next step further and consider the role of a cooking pot in your customers' lives. What is it about your business that touches other people's lives? Pots are used for cooking - but what kind of cooking? If people can use your pot to steam and boil, but not for frying, you can conclude that you are in the "health" business. Since pots are stored somewhere, you are also in the kitchen storage domain. Pots need to be cleaned, so you also need to add the "cleaning" domain. The shape, finish and overall aesthetics of your pot also makes it part of the "decorating" domain.
3. Educate customers about your business. Some of you operating well-established businesses - such as a grocery or retail clothing store - need not concern yourselves too much with educating consumers as majority already have a clear understanding of what you do and when they might need you. You only need to communicate the special features of your business, or what sets you apart from your competitors. Tell potential customers that you do a better job or offer extra service.
However, it is a different story when you are running a business in a new, obscure or technical field. Hand out your business card that says that you are selling wholesale lapidary supplies, and chances are you will be met by blank stares. Even less obscure businesses, like Internet marketing consultant, still need to be explained to consumers, as it may not be clearly understood.
Even if your business has been in operation for some time, don't assume that you do not need to educate customers about what you do. The more people know about what you do, the better they will see when, how and why they will need you.
4. Ensure clear pricing structure. Nothing wins the trust of a customer faster than a sound pricing policy. Put in trickeries - e.g. saying that a product is free only to have the fine print saying that a monthly fee of $2 will be charged to their credit card, or offer a free CD but charge $7.50 for domestically shipping the CD - and customers will run as far away as possible..
According to the authors, the key is to make sure that you do not confuse or mislead your customers. State upfront what is included, and what is not, in your price. Online businesses, for example, must clearly indicate their prices including shipping; handling and other taxes to avoid shopping cart abandonment. If you are running a service business, which doesn't have a tangible product to which a price can easily be attached, be sure to tell your customers clearly what your price is even before they ask.
5. Open management policies. If you want positive recommendation from other people, forget the practice of "playing your cards close to your chest." According to the authors, openness builds customer trust, which is the prime requisite of any marketing without advertising campaign. In particular, you must have an attitude of openness in your pricing, your treatment of employees (if any), and your willingness to answer questions about your products and services.
6. Help customers find you. Having the best product or service will not mean anything if people don't know that you exist. The authors recommend that you ask two important questions: Do the maximum possible number of potential customers knows how to find your business? Assuming a potential customer knows who you are, can he actually get to your goods and services with reasonable ease?Answering these two questions involve thinking about a lot of things about your business. There is no one way to list information about your business in a way everyone will find it; you need to try different venues and see which of these works for your business.
Is your business name easy to remember? Can people find where you are located? If you are operating a traditional store, it is extremely important that potential customers know where your business is located. You must think about your location's convenience of access, as well as the visibility of your signs. If you are on the Internet, your domain name must be easy to spell, type, and remember. How do you expect users to remember a 36-letter word domain full of dots and hyphens?
Whether you are operating online or offline, telephone accessibility is extremely important. Be sure that customers can always reach you, or at least be able to leave a message when you are not around. Also, consider how Yellow Pages listing can boost your presence. Note, however, that some businesses are perfect match for the yellow pages, while for others; it is a waste of time and money.
You also need to find ways to creatively and widely list your services. Try specialized phone books, trade and professional association directories, Chamber of Commerce publications, online listings such as directories and electronic bulletin boards.
7. Keep a database of customer information. It would be very easy to tap customers to help market your business if you know how to find them. Devise ways to get some information of your customers, including their mailing addresses and phone numbers. Some big retail stores get their customer's name, address, phone number and birthdays to plan promotional offers around their birthdays. Also keep a listing of their referral sources, if applicable, and a separate list of interested parties.
8. Have an open recourse policy. Try as we might, we cannot avoid slip-ups and customer-related problems. You may have unintentionally charged the credit card of your customer twice. A customer may return a dress bought from your store that turned out to have a manufacturing flaw. A car that was not repaired right will be brought back to you for another round of repairs. A customer may request for a refund after the pottery ordered from your Web site arrived in a thousand broken pieces.
How well you respond to complaints can spell the difference between winning the recommendation or the wrath of the customer. To avoid losing customers (and their referrals), the authors recommend that you need to establish an effective recourse policy. You need to provide a way where customers' complaints and grievances can be addressed and given a fair resolution. More than that, you need to make sure your customers understand and trust what you offer. You can gain customers' loyalty when you promptly and attentively make sure that they are treated right.
9. Design and implement a marketing plan. A marketing plan objective is to give your customers, associates or prospects a sense of participation in your business. The authors suggest that a marketing action plan should include three basic elements: (a) the statement describing your business; (b) list of people you already know who are in a good position to recommend your business to their friends and acquaintances; and (c) list of marketing actions and events that will stimulate the people on your list to make recommendations.
The next step is to plan your marketing actions, which could either be direct, parallel or peer-based. Direct marketing entails contacting people by telephone or in person to inform them of an event or a promotion. Recitals of dance schools where families and friends of performing students are invited is a subtle way of direct marketing. Or if you have the cash, you can follow America Online's lead in mass mailing software and offers of free access time to entice potential customers to use their service.
Parallel marketing, on the other hand, is aimed at promoting your business area in general, and not just your business. You basically tie your business with a complementary product or service, whether as part of an information package or suggestions of other valuable products that you know your customers will use and appreciate. A lawyer, for example, could send his small business clients with a booklet on partnership laws. An Italian restaurant could have a regular drawing among customer entries for tickets to the opera.
Peer-based marketing requires an understanding of your role as part of a group of peers in your field and to make effective use of it.
10. Create a calendar of events. What good is a written marketing plan if it is never executed? Sometimes you are so caught up with our day-to-day tasks that you forget to implement your marketing action plan.
The authors strongly suggest the need to plan ahead and spend time and effort doing creative marketing on a regularly scheduled basis. Keep track of events, scheduling major events well in advance. If you want to meet business people in your area, for example, you can schedule an open house for businesses. The steps leading to this event could include designing fliers and invitations to businesses, printing these materials, meeting with business owners, ordering flowers and catering, and planning for the logistics of the event.
Don't wait for business to slow down before putting your marketing plan into action. The best time to market is when you do not need the business. The book Marketing without Advertising can show you the right marketing techniques without the damaging your bank account.