Download Research Study: Evidence Reveals How to Grow in Any Economy

Research Study:
Evidence Reveals
How to Grow in
Any Economy
Critical Strategies.
Avoidable Mistakes.
New Business Approaches.
The Study
This study was developed as
a public relations effort and
as a way for us to help the
companies we work with to
grow and prosper.
When they grow… we grow!
Researched
and produced by
© Copyright - 2010
2
Do you know?
•  What percentage of companies reach
$1 million in annual revenue?
•  How about
$5 million?
Source: Chet Holmes author of The Ultimate Sales Machine: Census Bureau
© Copyright - 2010
3
The reality…
•  Only 5% of
companies will
ever reach $1
million in annual
sales
•  Only .08% will
reach $5 million
Source: Chet Holmes author of The Ultimate Sales Machine: Census Bureau
© Copyright - 2010
4
Business stagnancy in the U.S.
• 
• 
Only 30% of businesses
survive and only 10% of
these businesses grow
This means, 90% of all
businesses become stagnant!
90%
80%
70%
Where
are you?
60%
50%
40%
• 
Typically, growth is stunted
when business climates
change… buyer spending
habits, new competition,
product supply and demand
30%
20%
10%
0%
Stagnant
Growing
Source: Office of Advocacy of the U.S. Small Business Administration adapted from
the Bureau of the Census Economic Survey
© Copyright - 2010
5
Major drivers of stagnancy
In a review of businesses that
failed to grow, the majority
struggled in 4 key areas:
Management
Business Planning
Financial Planning
Marketing
Source: U.S. Bank Study Business Failure 2008
© Copyright - 2010
6
Focus on Marketing
•  60% of business owners that failed to
grow listed poor marketing as a critical
contributor and
▪  half of these business owners rated
themselves “low” or “very low” in
their marketing skills
•  60% of business executives surveyed
lack confidence in their marketing
decisions and believe their marketing
could be more effective
•  50% are not satisfied with the time
spent on marketing their companies
SOURCES: U.S. SMALL BUSINESS CONTRACT # SBA-95-0403, PAPER FINANCIAL DIFFICULTIES OF SMALL BUSINESS AND REASONS FOR THEIR FAILURE (1998); D. BRADLEY III & H. MOORE,
“SMALL BUSINESS BANKRUPTCY CAUSED BY LACK OF UNDERSTANDING OF BUSINESS ENVIRONMENT AND CONSUMER NEEDS,” SMALL BUSINESS ADVANCEMENT NATIONAL CENTER, 1997; .
REDEFINING BUSINESS SUCCESS: DISTINGUISHING BETWEEN CLOSURE AND FAILURE, SMALL BUSINESS ECONOMICS, AUGUST 2003, : “HP SURVEY REVEALS TOP U.S. BUSINESS MARKETING
CHALLENGES,” BUSINESS WIRE, FEBRUARY 2008
© Copyright - 2010
7
Expertise is required in critical areas
However, less than 30% of mid-sized companies feel they are
competent in every marketing area
Competent
Could do more
Barely surviving
Branding
28%
Advertising
26%
47%
Print
Collateral
24%
54%
Direct Mail
23%
Haven’t started
61%
41%
7% 5%
16%
12%
20%
11%
11%
16%
Take a moment and rate yourself….
SOURCES: FIRST ANNUAL MIDMARKETER AWARENESS SURVEY RESULTS, 2008
© Copyright - 2010
8
Market share is becoming increasingly
difficult to achieve
•  In 2005, more than 156,000
products debuted in stores
globally: one every 3 seconds
– 75% of these failed
•  Roughly 21,000 new brands
are introduced worldwide
per year – 52% of these
will fail
Source: SDL Maidenhead – July 6th, 2007 – Companies struggle to manage brands
© Copyright - 2010
9
Four
Major
Marketing
Mistakes
10 Mistake #1:
Cutting
Budgets…
when aggressive
action should be taken
Ask yourself right now….
When is the best time to market aggressively?
11
During a recession!
Competitors cut back on marketing expenditures
Less competition enters the market
Window of opportunity - 86% of executives
agree advertising in a down economy keeps a
company at the front of the audience’s mind
Major brands
that invested in
marketing
campaigns
weathered the
effects of the
2001 recession
— those that
didn’t lost
market share
……..or worse
SOURCE: BROOKS, D. & SEE, E. “THE SALES THREATS THAT CAN CRIPPLE MARKETING: YOU CAN'T CONTROL GAS PRICES, WEATHER
OR COMPETITION-BUT YOU CAN REACT,” ADVERTISING AGE, JUNE 16, 2008: MARKETING INSIGHTS – REF. HARRIS STUDY 2008
© Copyright - 2010
12
Advertising can prevent stagnation
A McGraw-Hill study examined nearly 600
businesses from 1980 - 1985 and found:
Companies that advertised aggressively
during the recession had sales 256% higher
than those that did not continue to
advertise
And… firms that chose to maintain or raise
their level of advertising expenditures
during the 1981-1982 recession had
significantly higher sales after the economy
recovered
Source: Advertising during Times of Economic Uncertainty.” American Business Media – Association of Business Information Companies; 2008.
© Copyright - 2010
13
On the other hand….
Percent Drop in Revenues
•  Reducing ad
spending by 50%
for just one year
caused revenues
to drop 23%
•  And it took 2 full
years to recover!
Source: Forbes Magazine, June 2008
© Copyright - 2010
14
The more you cut - the more you lose!
Percent Drop in Revenues
•  Totally
eliminating ad
spending
caused a 75%
drop in
revenues
•  Full recovery
took 5 years
Source: Forbes Magazine, June 2008
© Copyright - 2010
15
A Case Study
Everyone drinks milk right?
Well that’s what milk producers
thought!
• To cut costs, U.S. milk ads were
pulled in the early 1990s
• Sales went unchanged for
12 months
• Then… sales began plummeting at
alarming rates
Source: Marketing Daily Commentary, April 2, 2009, Wasting Money on Advertising by Gray Hammond
© Copyright - 2010
16
The reality behind the cost-cutting decision
• 
Millions were lost and it took 18
months for sales to rebound!
• 
Apparently, it’s important to
constantly remind buyers…
“Milk Does A Body Good”
• 
Remember… sales can plummet in
as little as three months for any
company in any environment
Source: Marketing Daily Commentary, April 2, 2009, Wasting Money on Advertising by Gray Hammond
BROOKS, D. & SEE, E. “THE SALES THREATS THAT CAN CRIPPLE MARKETING: YOU CAN'T CONTROL GAS PRICES,
WEATHER OR COMPETITION-BUT YOU CAN REACT,” ADVERTISING AGE, JUNE 16, 2008: MARKETING INSIGHTS – REF. HARRIS STUDY 2008
© Copyright - 2010
17
Mistake #2:
Not Making the Right
Advertising Choices
18
Which will work?
The Fournaise
Business
Papers
Marketing Group, one
of the global leaders
in tracking media
marketing
Internet
effectiveness,
revealed 60% of
2008’s worldwide
advertising spending
failed to deliver the
Outdoor
results expected by
their marketers and
was considered
wasted advertising
Direct Mail
expenditures
Newspaper
Magazine
TV/Cable
Radio
Yellow Pages
Source: The Fournaise Marketing Group: 60% of Advertising Spending was wasted in 2008: Author: Otilia Otlacan: January 2009
© Copyright - 2010
19
Costs are up… effectiveness is down
Total U.S. newspaper circulation
figures:
1990: 62,328,000
2008: 48,597,000 (down 22%)
$210,300
$105,532
Yet the cost of newspaper
advertising per unit of
circulation has doubled
since 1990
Wall Street Journal
1990
2009
Source: BusinessWeek July 12 2004 http://www.businessweek.com/magazine/content/04_28/b3891001_mz001.htm, Newspaper Association
of America http://www.naa.org/TrendsandNumbers/Total-Paid-Circulation.aspx
© Copyright - 2010
20
Commercial skipping is costing TV
advertisers $4 billion dollars
•  A staggering 90% of
people on TiVo skip
past ads
•  78% of advertisers
say TV advertising
has become less
effective
Source: “The DVR Dilemma: Managing Consumer Behavior”;
www.jupiterresearch.com, http://www.ehomeupgrade.com/2006/05/05/
dvr-commercial-skipping-could-threaten-8-billion-in-tv-advertising/;
http://blogs.zdnet.com/ITFacts/?p=10466
© Copyright - 2010
21
What about print collateral and direct mail?
• 
76% of companies are not
competent in designing print
collateral/direct mail - mass
marketing is typically the
focus
• 
"I did a mailing once and never
got any business.”
• 
Experts say it takes 6 – 12 times
of making repeated contact
before a buyer is in a purchasereadiness mode
SOURCES: FIRST ANNUAL MIDMARKETER AWARENESS SURVEY RESULTS, 2008
© Copyright - 2010
22
Email is becoming less effective
• 
• 
• 
• 
30% of email marketing is
blocked by SPAM filters
69% of email is deleted
based on the subject line
30% of subscribers change
email addresses annually
Subscribers below age 25
prefer SMS (short message
service or texting) to
email
Source: ClickZ.com Seven Signs You Need to Revive Your Permissions Database By Jeanniey Mullen Aug 31, 2009 Convinceandconvert.com
15 Email Statistics That Are Shaping The Future author: Jay Baer
© Copyright - 2010
23
Mistake
#3:
Not Marketing
to Your Buyers
Like You Know
Who They Are
24
Doors are being slammed shut every day!
• 
From 1996 to 2008 the number of
marketing messages per day increased
nearly tenfold (1,000%)
• 
Today’s over stimulated, ultra-sensitive
and less affluent buyer is bombarded
with 100s to1000s of options
• 
On the other hand, the more connected
and inspired buyers feel, the more
receptive they are to ad messages…
building that emotional tie is the most
difficult aspect
SOURCES: TALKTRACK™, KELLER FAY GROUP, 2006; UNION OF CONCERNED SCIENTISTS WEBSITE MARITZ DIALOGUE MARKETING GROUP
© Copyright - 2010
25
Buyers Pay Attention to what is Relevant
to them
•  The new buyer
“now” decides what
they will entertain
and which companies
they will tolerate
messages from
•  Increasing relevancy
has been shown to
increase consumer
response by 500%!
SOURCE: ROMANO AND BROUDY
© Copyright - 2010
26
Mistake #4:
Utilizing Ineffective
Advertising
Techniques
27
Mass Marketing
• 
Companies find it hard
to reach targeted groups
of buyers so they still
rely on the ineffective
one-way mass marketing
to push a product to
many buyers
Old
Brunette
Young
Blonde
Married
Bald
Single
Military
Source: Harvard Business Review, Rethinking Marketing, Roland T. Rust,
Christine Moorman, and Gaurav Bhalla, Jan–Feb 2010
© Copyright - 2010
28
So… how do you
get through the
maze with a series
of effective
messages to your
target audience?
29
3 Marketing Strategies
Designed to Grow your
Company
1. Really Know
Your Target
Audience
2. Use Best
Practices
Marketing
Techniques
3. Use tactics
you can
target AND
measure
30
Strategy #1: Really Know Your Target
Audience – Add Demographics
Income,
Home Value,
Age
Pets or
Children in
the Home
Comic Book
Reader
Stamp
Collector
Wine
Connoisseur
Wildlife
Donor
SIC Code
Annual Sales
Decision
Maker’s Title
© Copyright - 2010
31
Adding Demos to your customer list
Here’s an example:
Stock coaching
firm adds demos
expecting to find
clients are largely
“likely investors”
Turns out, only
18% were coded
as likely investors
while 75% like to
travel.
Conclusion: order lists of those with a travel interest, run
ads in travel magazines, etc.
© Copyright - 2010
32
Strategy #2: Use Best Practices
Marketing Techniques
Effective marketing has 5 specific
traits
1.  It Must Be Distinctive
—  Catches and holds the eye
2.  The Copy Must Educate
and Focus on Your
Prospects, not on you.
3.  Captures Attention With a
Screaming Headline
Source: The Ultimate Sales Machine author: Chet Holmes pg. 119-122
© Copyright - 2010
33
Continued…
4.  Your body copy has to
keep them reading.
5.  Tell your prospect what
you want them to do.
Give them a Call to
Action.
Source: The Ultimate Sales Machine author: Chet Holmes pg. 119-122
© Copyright - 2010
34
Strategy #3: Use tactics you can target AND
measure
•  Targeted and measurable
are the hallmarks of any
effective marketing
campaign.
•  New low-cost technology
can create highly
individualized direct mail
that can be easily targeted
and measured.
© Copyright - 2010
35
7 Musts of Marketing for Top of Mind
Awareness
a McGraw Hill Study
Advertising
Personal Contact
Direct Mail
Public Relations
Internet
Trade Shows
Corporate Literature
Source: McGraw Hill: Chet Holmes: The Ultimate Sales Machine, Nash, Edward L., ed. The Direct Marketing Handbook, 2nd ed.
McGraw-Hill, 1992
36
Why use Direct Mail? It’s still producing.
Direct Mail’s ROI is increasing
even in today’s climate an
investment of $1 in direct
marketing advertising, on
average, across all industries,
produced in incremental
revenue … even in a downturn
of:
• $11.61 - 2008
• $11.65 - 2009
• $11.73 - 2010 (projected)
Reasons for ROI increase
Better list management
More sophisticated targeting
Better measurement techniques mean
you can modify the campaign based
on results
# of mail items a household receives
today has decreased – less clutter
factor
Source: DMA: Power of Direct Marketing Report December 29, 2009: 2009 Direct Marketing Association: Response Rate Report: March 3, 2009
© Copyright - 2010
37
Why use Direct Mail? It’s still preferred.
A CMO study asked the following question:
What are your preferred methods for companies to
contact you about product or service promotions?
51% Traditional Mail
43% Email
5% Online Banners
1% Phone
Source: The Chief Marketing Officer (CMO) Council 2009 Why Relevance Drives Response and Relationships
© Copyright - 2010
38
Use Direct Mail to Drive Online Traffic
According to the 2009
Channel Preference Study
by ExactTarget
“Direct mail influences 76%
of Internet users to buy a
product or service online."
© Copyright - 2010
39
7 Steps to
Revenue
Producing
Marketing
© Copyright - 2010
40
Step #1: Right Audience
• 
Add demographics to current
client list to determine your
target market
• 
Add ways to gather information
about your target via in-store,
online, direct mail surveys, etc.
• 
Explore mailing list options
• 
Develop “Dream Prospect” list
© Copyright - 2010
41
Step #1: Right Audience cont.
Dream Prospect definition:
•  Ideal prospects that
make your company
profitable.
•  Prospects who buy
often, in large
quantities and at higher
margins.
Example
Telephone Equipment Company
Businesses
(36,000)
Businesses with older systems
(9,000)
Businesses with older phone systems
that have over 100 employees
(600)
© Copyright - 2010
42
Step #2: Right Messaging
•  You only have
3.5 seconds to get
their attention!
We have a
chair for
you.
•  Describe and emphasize
what makes you different
from your competition
Teachertoto
Teacher
Principalinin
Principal
5 Quarters
Quarters
© Copyright - 2010
43
Step #3: Relevancy
• 
85% of the information taken into the
brain enters through the eyes
• 
Global research shows drastic
differences in the Visual Desires of
different demographics; countries,
states, ages, genders, occupations,
education and income levels
• 
Recent research in neuroscience proves our eyes know what we will
choose before we realize our decision
Source: The Ultimate Sales Machine author: Chet Holmes pg. 148: Business Wire Press Release Source: Visual Targeting April 17, 2010, 5:22 pm EDT
© Copyright - 2010
44
One-to-One Marketing Gets Noticed
Each piece can be customized based on demographic/
firmagraphic data
© Copyright - 2010
45
Step #4: Offers
• 
Your ‘Offer’ can have a 500% impact on response rates,
up or down
• 
It can make the difference between a 2% response rate
and a 10% response rate
Source: Conversion Multiplier: 2008 Survey
© Copyright - 2010
46
Step #5: Tracking and Measurement
800 number technology can track
which prospects were motivated to
call on which offer or campaign.
New Personalized URL technology
can track which prospects hit
your website.
New Personalized URL
technology can track which
prospects hit your website.
www.Top4Reasons.com\Test.Perso
www.HowBizsGrow.com\Jane.Doe
© Copyright - 2010
47
The amazing results of a PURL
• 
According to the article “PURLs of Wisdom”,
“Personalization allows direct mail, to obtain
returns greater than 5 percent. Some of the
more effectively designed programs can
achieve returns of 20 to 30 percent.”
• 
According to the Direct Marketing Association
(DMA) 43% of buyers prefer to respond to an
advertisement online.
Source: Direct Marketing Association 2009
© Copyright - 2010
48
Two Studies Put Together
From:
§ 51% preferred traditional mail
§ 43% prefer to respond to an advertisement online
We would conclude that
providing a PURL site for
interested buyers would
produce the greatest
return.
Source: Direct Marketing Association 2009
© Copyright - 2010
49
Step #6: Repeated Campaigns
Consistent marketing
messages and multiple
repetitions over at least a
year will help increase long
term sales
• Builds awareness
• Builds credibility
• Creates a level of trust
• Conveys that your
business is established
• Keeps you fresh in
their minds
Purchasing Time for Buyers
47%
25%
17%
11%
3 Months
4-6 Months
7-12 Months
1+ Year
Source: Cahners Business Information Study and Vistage Survey cited by DMN3
© Copyright - 2010
50
And finally…..Step #7: Testing
Modify
and fine
tune the
strategy
Develop
a
strategy
Test the
strategy
Do it
again!
© Copyright - 2010
51
A quick word from our sponsor
52