Category Archives: Marketing

Branding, networking & promoting your business

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The Break-Even Analysis: Find the Pricing Sweet Spot

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To continue the topic of pricing,  in this case pricing a new product or service,  it is a must to know when fixed costs will be covered by unit sales at a given price and determine when in time the item or service breaks into profitability.  Performing a break-even analysis will reveal how many units must be sold,  or how many times the workshop must be delivered,  at a given price,  before production costs are behind you.  Integral to that question is unit selling price.  Costs are recouped faster when selling at $100.00 rather than $50.00.  Also related to pricing is what customers expect and agree to pay.  Appropriate pricing can increase profits faster than increasing sales volume.  One can sell fewer items and make more money per item.  Conducting a break-even analysis is Step 1 in locating your ideal price range.  Here’s the Break Even Volume (BEV) formula:

Fixed costs                                                      Fixed costs

BEV     = ______________________________        =         __________

Revenue per unit – Variable cost per unit                         Unit margin

Let’s add some numbers to the formula and assume that the fixed costs associated with delivery of your service is $5, 500.00: $1,700.00 went to the graphic artist for Power Point slides; $1,300.00 paid to the wordsmithing wizard for marketing collaterals used for promoting the service; and $2,500.00 for the wholesale value of your labor,  the time you spent crafting the intangible service.  These costs are fixed because they will not change,  no matter how many times the service will be delivered.  Variable costs associated with service delivery would be printing hand-outs for participants ($50.00) and the advertisement placed in an industry newsletter read by the target audience ($400.00),  meaning that the unit variable cost =$450.00.  If the service is priced at $750.00,  the profit,  or unit margin,  is $300.00 each time the service is delivered at that price.

$5,500.00

BEV     =        _________     =   18.33

$300.00/unit

At a per unit price of $750.00,  the service must be delivered 18+ times before a profit will be made.  From there,  a series of  “what if”  scenarios can be floated.  Chiefly,  what are competitors charging or is there a spike in demand that makes the product more valuable and can you increase the price?  Also,  can you lower fixed costs and obtain graphics services for a couple of hundred dollars less?  What if the marketing collaterals text was produced in-house by you and not outsourced?  How much will that increase the price of the time you spent developing the service,  another fixed cost?

Let’s say that you find graphics services for $1,500.00 and ask a marketing communications wizard to edit text that you write yourself for $800.00 (your personal labor increases: 6 hours writing at $50.00/hour = $300.00 + $2,500.00 = $2, 800.00).  Now,  the fixed cost is $5,100.00 and you think that $950.00 is a price that clients just might accept.  The variable costs will remain unchanged at $450.00,  because your printer is good,  his price is right and you’ll definitely need to advertise since you may want to charge more for the service.  At a unit price of $950.00,  the unit margin would be $500.00.   As shown,  by raising the price of the service by $200.00,  fixed costs are covered by delivering the goods 10+ times,  rather than 18+ times.

$5,100.00

BEV=             ________      =   10.2

$500.00/unit

As you can see,  the impact of other values such as increased advertising or higher quality materials or labor,  can also be assessed for impact on the pricing sweet spot and timeline for reaching BEV.  When bringing a new product or service to market,  take steps to identify the ideal pricing structure.

It is also useful to calculate the profit margin,  that is the percentage of sales revenues retained after all expenses are paid,  for each product and for the total line.  From the P & L Statement,  divide net profits by total sales revenues  (bottom line divided by top line).

 

Thanks for reading,

Kim

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Compelling Content Drives Inbound Marketing

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Reach out to potential customers by providing content,   the new tactic for advertising and demonstration of expertise,  and persuade those prospects to reach out to your business.  Traditional advertising,   email campaigns and PR,  better known as Outbound Marketing,  reach out to a broad audience that has been vetted for the presence of target customers,  yet still includes many that fall outside of that profile.

Outbound Marketing  “pushes”  information about your company out to an audience that has not necessarily demonstrated an interest in learning about the company and its products and services.  Moreover,  Outbound Marketing assigns to the intended audience a limited role: buy the product or attend the event.  Outbound Marketing usually costs more money than time to create and ROI can be difficult to measure.

Inbound Marketing is well-suited for the digital age and its use has grown tremendously as a result.  Inbound Marketing is driven by content that functions as a  “pull”,  drawing prospective customers who are interested in posted content to read,  learn and perhaps take action.  Inbound Marketing lives on the internet.  Slide Share,  Google +,  LinkedIn,  Twitter,  YouTube,  company websites and other social media platforms receive content and those in search of information choose to visit those sites.

Content production usually costs more time than money to create and ROI is much easier to measure.  Relevant white papers,  useful videos and podcasts,  research results,  surveys and your blog or newsletter form the basis of high-quality content that delivers your message and your professional acumen wrapped in a package that prospects want to open.  Prospects must take an active role and engage with Inbound Marketing content. They initiate and control the interaction.

When planning your Inbound Marketing campaign,  be advised that it is not necessary to either provide a wide variety of content or post content onto numerous venues.  The type of content provided,  frequency of postings and selected platforms will be guided by target market preferences.  Develop Inbound Marketing goals and devise an appropriate campaign strategy.  Brand awareness, customer acquisition / retention and lead generation will no doubt top your list.

Be mindful that Inbound Marketing content is based on giving and not receiving (despite your goals).  Prospective customers are hungry for knowledge and those who provide high-quality content will obtain trust,  respect and top-of-mind status that is reflected when decisions are made to purchase your category of product or service.

Thanks for reading,

Kim

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Marketing 2.0: How and Why You Measure Results

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Marketing is an essential function of every business.   Smart organization leaders understand that continually reaching out to current and potential customers,  with objectives to create loyalty and trust in the company,  its products and its services and building a brand,  are integral to sustaining a healthy enterprise.  Like all business initiatives,  marketing objectives and strategies must be periodically evaluated,  to monitor and measure results and determine how to adjust and optimize the program if results do not meet expectations.  Choose your marketing activities based on your knowledge of customer behavior.

The measurement of marketing results can be broken down according to a method recommended by Joseph Raymond Roy,  a marketing consultant based in Meredith, NH,  who gives us the acronym DATA:

1. Defining,  identify the result your marketing will promote (increasing the number of potential customers)

2. Assessing,  measure the dollar value of your marketing program (look at the number of customers and gross revenue)

3. Tracking,  determine if customers came to your business as a result of your marketing activities (ask new customers how they found you, or all customers in a survey)

4. Adjusting,  if it is obvious,  do more of what produces the desired result and less of what does not produce results.  In other words,  optimize your marketing activities.

Begin the measurement by calculating the amount of money invested in your marketing activities.  Obviously there is also time involved,  which should be taken into account,  but  it is usually difficult to attach an appropriate dollar figure to one’s time.  How much is the time you spend networking worth?  What is the time spent on social media worth,  or producing your monthly newsletter?

You may develop good relationships with potential referral sources,  but it may take 5 months or 5 years to receive a referral.  Speaking engagements and webinars  are easier to evaluate.  A well-respected venue always has value,  whether or not you receive referral business or meet a future client,  because the very act adds value to your curriculum vitae.  Calculate ROI by deducting the value of resources spent on marketing activities from revenues generated by customers who have come to you as a result of marketing activities.

Tracking  (i.e., forward tracking),  the process of building an identifying mechanism into each marketing activity before it is launched,  so that you can measure the results derived.  If you present a webinar,   the registration of participants,  which includes an email address for each listener,  is a most accurate tracking mechanism.  Responding to a product offer with a special code is another excellent tracking device.   The marketer will be able to identify which customer was not only impacted by a certain activity,  but also will know if that person eventually does business with the company.

There are various types of tracking methods,   including Point-of-sale tracking,  conducted when new customers arrive by asking them how they heard about you.  You will also use point-of-sale tracking when you tally up the sales results associated with the purpose of your marketing program,  be it bigger ticket items,  referrals,  or other customer actions.   Reverse tracking  is the process of going through your customer list and documenting how current customers became your customers.

If you write a blog or newsletter,  measure your reach by counting the number of subscribers,  email forwards and followers.  Point-of-sale tracking  will let you know if demonstration of your knowledge and expertise brings customers into the door.

The ROI of PR should be measured in at least two ways:  first,  through Media impressions,  in which the marketer counts how many media outlets wrote a story or made a radio or television announcement in response to a press release that was sent (a follow-up phone call will likely boost the response rate).   Second,  through Content analysis one can evaluate the accuracy of what was broadcast as a result of the press release and the prominence of item placements in the chosen media outlets.

Online data analytics systems  will track all visits to your website,  customized to your needs.  How many potential customers abandon your website and how many follow-up with inquiries or engage by clicking on your newsletter or blog? What is the impact of your social media outlets on your marketing objectives? Here is how you’ll know.

The ultimate marketing metric is the percentage of your customer base that result from marketing activities,  or Marketing Originated Customers.

It may take a service provider 6 – 12 months to have results to measure.  Obtaining a contract from a new or returning client is a longer sales cycle than selling ice cream cones.  Metrics make it possible to know which marketing activities yield the best results and that knowledge will give you the opportunity to optimize your marketing efforts.  You will do more of what works,  perhaps launching an advertising campaign during a particular season or increasing your participation in certain business or professional groups.  Other activities may be diminished or dropped altogether.  Gross sales will give a dollar value ROI to your marketing program when compared to the pre-marketing program value.

Marketing metrics ensure that you receive a solid ROI on your marketing activities.  Appropriately chosen and implemented marketing activities that are tracked and optimized will always pay for themselves.

Thanks for reading,

Kim

 

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Marketing 2.0 : How and Why You Do It

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All those with a product or service to sell must institute a marketing program that promotes those products and services to target customers.  Marketing programs consist of strategies and activities that derive from promotional objectives you would like to achieve for your products,  services,  or the company overall.  Advertising;  writing a blog, newsletter, or book;  speaking at business associations;  teaching a subject that showcases your expertise;  making an in-kind donation to a local charity event;  presenting a webinar;  nominating yourself for (and winning!) a business award;  writing a press release to announce to local media that you are presenting a webinar,  have won a business award or published a book;  networking to meet new colleagues or reconnect and build relationships; and presence on social media are examples of activities that carry out your marketing strategies and have the potential to ensure the achievement of marketing objectives.

For most,  the goal of marketing is to increase sales  (that is, revenue)  by increasing awareness and trust in the company and its products and services and in that way increasing the number of its potential customers.  Marketing is a way to fill the sales pipeline,  as is prospecting for potential customers  (wear your sales hat when prospecting,  although prospecting is not quite selling in the same way that marketing is not exactly selling).  Generally,  marketing strategies are created to produce one or more of these results:

1. Awareness,  so that target customer groups will learn of the existence of your company and its products and services.

2. Perception,  so that target customer groups will think of your company and its offerings in a certain way.  This is the core of brand development; trust and confidence are the primary attributes that you must persuade customers to associate with your company and its products and services.  Depending on your business,  other attributes you may want to attach to the brand are luxury,  practicality,  innovativation or quirkiness.  Reputation management and crisis PR are under this heading.

3. Behavior,  so that target customers will be persuaded to take action.  Your objectives may include attracting new customers;  encouraging repeat business from existing customers;  encouraging sales of higher-ticket items or premium services;  or stimulating referrals by persuading customers to recommend your products and services to others.

Because time and money are limited resources for business ventures large and small,  it is a big advantage to know which of your marketing activities works and if possible,  to also know which activities are effective for certain customers.  Further, it is essential to know how many customers come to your business as a result of marketing activities.

To measure the return on investment ROI of your marketing program,  one must venture into the realm of marketing metrics,  from data analytics to Big Data.  Next week,  we will look at simple yet revealing marketing metrics that will evaluate the effectiveness of your marketing and guide your future marketing activities.

Thanks for reading,

Kim

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12 Sample Customer Survey Questions

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In numerous posts over the years,  I’ve recommended that you conduct customer service surveys to guide your decision-making as you refresh your brand,  update your business model,  promote client retention,  stimulate referrals or initiate any other changes in your business practices.  Customer surveys can unearth all sorts of interesting and actionable data.  A dozen well-written questions can  give revealing insights into what drives the need for your services,  what persuades decision-makers to choose you instead of a competitor and customer expectations that may not be immediately apparent.  Surveys help you learn how your operation stacks up against the competition and can identify business strengths and weaknesses.

To give you inspiration,  I hereby provide a few sample questions.  Send your customer survey along with the final invoice of a project.  Include it on your website,  Facebook, Google + or LinkedIn page.  Announce it on your Twitter feed.

  1. What service did (the company) provide for you?
  2. What factors made you decide to hire (the company) for this project?
  3. Do you feel that your project contact/manager acted in your best interests and your organization’s?
  4. How closely did (the company) adhere to the agreed-upon project timeline?
  5. Do you feel that your project contact/manager responded to your requests for information and other inquiries in a timely fashion?
  6. Considering the value of this project to your organization,  how do you feel about the amount paid as compared to the value received?
  7. If you feel that you received poor value,  please describe the problem (s).  How do you feel about the process of providing resolution?
  8. Would you be willing to invite (the company) to work with you on another project?
  9. Are there additional services that you wish (the company) would provide?
  10. How often do you typically hire outside project-specific workers?
  11. Based on the experience of working with (the company) would you be willing to recommend to a friend or colleague?
  12. Do you have any suggestions for improving the services provided,  or related administrative matters?

Thank you for your feedback. Your honest opinions are sincerely appreciated.

A big part of growing a successful business is through referrals and repeat business.  Clients only return to you or recommend your services when they are extremely satisfied with your performance and have a high degree of confidence in your operation.  Your clients possess a wealth of information that may not only give you the opportunity to bring solutions to their problems and increase your revenues as a result,  but may also give you ideas about how you might attract new business.  The only way to access this information is to ask your clients and listen to their answers.

Thanks for reading,

Kim

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What Business Are You Really In?

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Every business starts with a proposal to deliver certain products or services to those would be their customers.  The business model encompasses operations processes,  sales distribution and early stage marketing messages.  But over time,  the business owner or marketing team must achieve a more sophisticated knowledge of target customers and use that understanding to advance from exclusively dwelling on the functional aspects of items sold and the obvious benefits.

Successful products or services become  “brands”  by marketing the intangible essence that is associated with what they sell.  Brands connect with an unspoken motive of the customer and promote reputation,  image and aspirations.  Luxury brands like Neiman Marcus,  Chanel and Jaguar sell the image of wealth and status.  Nike sells the image of the focused,  independent,  athletic ideal self.  Puma,  another athletic shoe company,  avoids the athletic angle and sells urban cool along with their sneakers and other apparel.  Harvard Business School professor Theodore Levitt  (1925 – 2006)  described this phenomenon and its implications in  “Marketing Myopia” ,  his seminal article that in 1960 appeared in the Harvard Business Review.

Brands rise above being mere purveyors of products and services,  otherwise known as commodities.   Getting a handle on the  “je ne sais quoi”  unspoken  mission of your products or services as perceived by customers is the only way to achieve break-out success.  Delivering high-quality products and services via the optimal business model is how to build a following and earn a good reputation.  Being known as trustworthy and dependable are integral elements of building a brand.  But it is only the beginning.  Consider this: a film studio does not function to merely make and promote movies.  A film studio’s real business is entertainment.

So let’s figure out how to learn what business you are really in.  Why not start by teasing out the motives for doing business with you rather than a competitor?  Were you lucky or well-connected enough to persuade a powerful person to do business with you?  Does the coolest kid in class wear the clothing you sell?  The recommendations of thought leaders and other trusted sources are worth their weight in gold.  If a VIP gives you an assignment,  others will want to emulate that VIP and do business with you,  too.  Overwhelmingly,  people are followers and want to be seen where the  “in” crowd goes.

Keep that tendency in mind as you peel back another layer and decode the self-identity of your target customer and the image that your archetypal customer wants to project.  Get your arms around the social or professional impact of your products or services.  Who do your customers aspire to be,  whom do they emulate or identify with?  What is the underlying purpose of your product or service?

When you can decipher and describe the above,  you will discover the business you are really in.   Apply that knowledge and create marketing messages that resonate;  advertising choices that deliver the desired ROI;  design product packaging that customers respond to;  institute a pricing strategy that reflects the perceived value of your products and services;  and write a tag line that reflects the self-image,  aspirations and/or unspoken motives of your archetypal customers.

FYI here is a 1975 version of Theodore Levitt’s classic article  “Marketing Myopia”  http://www.sitesuite.com.au/files/marketingmyopia.pdf

Thanks for reading,

Kim

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ID Your Target Customers

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Step One in evaluating the prospects of a business venture requires that you know who is likely to become a customer.  Here are 8 smart questions that will help you gauge whether you have a viable target market for your enterprise:

1.  Who will pay a premium price for my products or services?

  • Investigate how much business those who would be your closest competitors are doing and learn what motivates their customers to do business with them and find also pricing info,  if possible.
  • Assess your competitive advantages: do you possess a  “secret sauce”  that will make customers do business regularly and pay a little more?
  • Assess the value of your personal brand: who will do business with you because they value what you represent and do?

2.  Who has already done business with me?

  •  If your business is up and running,  growing your business often means persuading those who are already customers to do more business with you.  Which upgrades and extras to your service line might your current customers buy?
  • Speak with customers you know well and ask what adjustments in service,  features or delivery system would make their lives easier.
  • Design a survey and send it out to your mailing list and also add to your website and social media,  so that you can get more opinions and validate the findings of the customer Q & A.
  • Beta test new products and services with current customers,  to gauge their acceptance and refine the concept,  packaging,  marketing message,  delivery system,  price point, etc.

3.  Am I overestimating potential demand for my products and services?

  • Hire a marketing research firm to run a focus group to estimate the size of the market for your product or service.
  • Smaller budget holders should refer to numbers 1 and 2 and figure out how much business competitors are doing and if applicable,   ask current customers which new offerings would be useful to their organizations.

4.  Am I assuming that everyone values what I value?

  • Reality test your take on the priorities of your target market by asking them,  in face to face meetings or via surveys.  Read industry blogs to confirm how customers use similar products and services.
  • Find the thought leaders and listen to what they say about the need for what you plan to sell.  Without revealing your motive,  you can write in and ask questions.

5.  Does my business model match my target customers?

  • The business model is the blueprint for positioning your venture to make a profit.
  •  The ideal customer groups for your products and services must receive the right marketing message in the right way.  Products and services must be sold in the right way at the right price,  using the method of payment that customers expect.
  •  Design a business model that inspires trust and confidence and is user-friendly convenient.

6.  Who are my main competitors and how did they get started?

  • Study three or four close competitors and learn the back story of the founders.  What competitive advantages do they possess?
  • How long have those competitors been in business and what may have changed,  or remained constant,  in the business environment that allowed them to find success?
  • Define critical success factors for your venture.

7.  How will potential customers and I find each other?

  • Hair dressers,  manicurists and employees of consulting firms have the great advantage of being able to steal future clients from their former employers.  If you are employed in the industry in which you plan to open a business,  start now to strengthen relationships with those customers who might jump ship and go with you.
  • Learn how to reach your target customers.  Which organizations do they join,   which conferences do they attend,  which blogs or newsletters do they read,  does social media for business resonate with them and where should you advertise.

8.  Do you see opportunities to expand your target market?

  •  Eventually, it will become necessary to find ways to expand your business either vertically or horizontally. Stay abreast of happenings in the industry and maintain good communications with your customers to understand what you might offer in the future.
  • Can you create a niche market or two by tweaking what you have,  or offering it under another name and advertising in different media?

Thanks for reading,

Kim

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Highlights of The Social Business Benchmark Study of 2013

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Last year Leader Networks,  a Boston area consulting firm that specializes in B2B social media and the global not-for-profit think tank Society for New Communications Research,  teamed up to conduct a comprehensive and global study of the usage of social media for B2B interaction.  Fifty-five mostly for-profit organizations of various sizes participated.  The study examined the following topics:

  • How organizations are currently leveraging social business efforts
  • The use of social media tools,  internally and externally
  • The readiness of organizations to utilize social media tools
  • Intentions of social business strategy
  • Social media marketing strategy and the ability to leverage and operate same as social business initiatives

Companies studied were mostly present on LinkedIn,  Twitter,  YouTube,  Facebook,  Google+ and their company-sponsored blog,  in that order.  The study distinguished between social media marketing,  which it defined as the use of social media platforms for marketing and social business,  defined as using customer information gleaned from social media marketing to enable more efficient and effective decisions,  actions and outcomes within the organization.  The study also developed a continuum of social media use:

  • Socially Familiar- organization is present on at least one platform and has policy guidelines;  the organization is experimenting to learn what works
  • Socially Present- organization has minimal or limited social media staffing, strategies,  or policy guidelines;  brand advancement forms the core of information communicated
  • Socially Enabled- social media platforms form the basis of customer outreach;  moderate to significant levels of budget,  staffing,  policy guidelines and strategies are in place and utilized optimally
  • Socially Integrated- organization has significant use of the above indicators;  communication is two-way,  with much customer engagement;  information gleaned is incorporated across the organization

Companies usually approach social media involvement through a few Socially Familiar staff members who experiment with various platforms to figure out what works best for company objectives.  After about 3 – 6 months,  those staff members will present their findings to direct-report management and request approval to advance to the next level.   At the Socially Present stage,  selected social media platforms are used to broadcast brand awareness messages and marketing campaign information.  Communication is primarily one-way.   This period usually lasts 6 – 24 months.

At the Socially Enabled stage,  communication is primarily two-way and information is deemed actionable.  Social media staff gather and disseminate information from social media communications deep within the organization,  where it impacts R & D,  customer service,  technical support,  marketing campaign strategies,  sales distribution choices and other functions.   Social media may play a role in nurturing relationships with organizational partners and suppliers.  Tangible social media ROI is recognized.  The final stage,  Socially Integrated,  is only rarely achieved at this point.  In fact,  this stage may not fit the objectives of most businesses.

Insights brought forth from the study were what one would expect.  C-suites executives are rapidly accepting the inevitability of social media and budgets are being made available to support staffing,  which is based in marketing departments.  Social media strategies are being developed and social media guidelines are being drafted (by legal departments).  Brand reinforcement,  rather than customer engagement,  is the primary goal of B2B social media strategies at this time,  but lead generation (sales departments),  R & D and customer service (operations departments) are emerging as important players.  Linking the social media strategy to business needs and performance metrics to measure ROI is becoming more common.

Nevertheless,   in most cases,  funding for social media initiatives remains low.   More than 50%  of respondents reported that their companies spent 5%  or less of their IT budgets on enabling social media platform tools.  23%  reported that their organizations had no plans to spend on social media.

Thanks for reading,

Kim

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Big Data and Small Business Marketing

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Let’s start with the definition.  When the term  “big data”  is used,  what does it really mean?  Jon Miller,  co-founder and CEO of Marketo,  calls big data a catch-all term for very large and complex data sets that exceed the processing capabilities of the typical available computer software.  In general,  big data refers to the compilation of everything that takes place over the internet: transcripts from Twitter comments or call center conversations,  online videos,  podcast uploads and visits,  webinar broadcasts,   all blog postings,   all website visits,  all credit card transactions,  all ATM activity,  all online purchases,  online advertisements,   downloads of music and uploads of photos.

As regards marketing,  big data refers to all information that details retail sales,  online sales,  market share,  website visits,  blog reads from your website,  newsletter reads from your website,  responses to online customer surveys,  online response to special offers and online advertising,  plus all marketplace and industry data about global,  national and regional  business conditions.

Whatever it is you need to know about customers,  the industry and the business conditions in which you operate is buried within big data.  But in the avalanche of information,   deciding which data to access and interpreting what is brought forth is the marketer’s challenge.  Determining the right questions to ask is the primary imperative,   as the late great management guru Peter Drucker pointed out.

If you want to use big data in your marketing plan,  then  propose questions that will elicit the answers you need to fine-tune your marketing mix.  Maybe you’d like to become more effective in converting website visitors into customers?  A list of the names of prospects who visited your website,  spent more than one minute reading your blog or newsletter,  forwarded the post to someone and and then tweeted some content about what he/she found to others would indicate a serious shopper for your products or services.  Big data can help predict which marketing activities are most likely to convert a prospect who has reached that level of engagement.

Google Analytics can reveal part of the game plan,  but only big data can get seriously granular.  For example,  algorithm-based predictions can forecast the expected impact of marketing campaign activity on those who surf your website,  indicating who should receive special offers via email or who should be invited to join a focus group.  Algorithm-based predictions can also forecast the likely impact of marketing activity on the next quarter’s,  or next four quarters’ revenue.

Based on what is learned through big data,  the marketer can make much more specific and informed decisions about target or niche markets that have the most sales potential,  strategies to build brand awareness and loyalty,  advertising choices and budgets for targeted media outlets,   social media choices that create the most buzz and the ROI of that buzz and the marketing message that drives sales.  Who will be your best customers,   why will they be your best customers,   what is the average amount of money the customer will spend in your business,  how loyal is the customer to your brand,  what types of advertising does the customer respond to best,  what kind of social media does the customer respond to best and will those customers create good word of mouth  (still the best form of advertising)  for your business?

So how can small businesses and Freelance solopreneurs access big data?  It can be done by hiring a marketing firm that we most likely cannot afford.  At this time,  big data usage will be the playground of big businesses.   If it’s any consolation,  marketing firms are still trying to get arms around big data themselves.  For now,  traditional marketing analytics will have to suffice for the 99%.

Traditional marketing analytics are useful and certain data we already own: bricks & mortar sales data,  online sales data,  seasonal sales variations,  customer zip codes,  popular service packages,  pricing and the number of Foursquare,  Facebook,  LinkedIn and Twitter followers,  for example.  Market testing is expected to remain a vital part of developing a marketing strategy,   even when big data is used.  Business owners and marketers will continue to measure the impact of promotional strategies employed.  Finally, whether big data or marketing analytics are used when devising a marketing plan,  proposing the right questions,   as Peter Drucker advised,  is where one starts.

Thanks for reading,

Kim

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The Price Is Right

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Pricing is an art and a science and pricing intangible services is especially challenging.  Setting the right price for a product or service is a critical step in building a profitable business.  Quite simply,  you must charge enough money to not only cover your production or procurement costs,  but also reflect the value of the product or service provided and the value of your brand,  i.e.,  what clients will pay for the confidence derived from doing business with you.

But pricing a service is tricky and unless you are for some reason privy to what others may charge for similar services,  you are in the dark.  You probably do not know what competitors are charging,  so benchmarking is impossible.  The price that clients will pay you hinges on what they feel the job is worth and what they feel that you are worth.  Your mission is to avoid being perceived as a commodity,  vulnerable to the cynical bargaining down of your price points.  There are guidelines to follow when creating a pricing strategy.

Step One is understanding how clients perceive the value of your services and of your brand (reputation).  A “cost-plus” pricing strategy,  which is tied to what it costs to produce or purchase at wholesale the product or service to be sold is inadvisable,  according to pricing experts.  If customers are willing to pay $100.00 for a product or service that costs $10.00 to provide,  then charge what the market allows.

Step Two is understanding how the client wants to purchase your service.  Much will depend upon the type of services you provide and whether this is a one-off project,  or an ongoing retainer arrangement.  Whenever possible,  avoid charging an hourly rate and instead  “bundle” products and services into a project fee.  Do not give clients who are so inclined the ammunition to nickel and dime you by scrutinizing duties that you invoice and arguing over how long it should have taken to perform them.

Step Three is establishing different levels of service available: basic,  upgraded and premium.  Jean-Manuel Izaret,  a partner at the management consulting firm Boston Consulting Group,  insists that it is always best to give clients a choice,  whenever possible.

Step Four is targeting clients who value your brand and your services and are willing to pay a premium to do business with you.  The size of your available market will shrink, but each client will be worth more money to you.  It will also be easier to make the sale,  because this group of prospective clients values you and what you can do.  Access this group through networking and self-promotional activities: those who have heard your webinar,  read your blog or newsletter,   have received a recommendation from a trusted referral source,  have read a favorable article about you in the press—here is where your PR and relationship building activities can pay off.  This group of clients will have faith in your expertise and will agree to pay premium (but fair) prices at contract signing time.

Step Five is knowing your competitors.  It may be impossible to learn what they charge,   but you can learn the value of their brand.  Are you swimming with powerful fish,  or those about your size and strength?  That could impact your pricing strategy,  but only if clients are familiar with what the big fish charges.  It is unwise to price your services low in the presence of a competitor with a strong and well-regarded reputation.

Step Six is to benchmark against competitors in different parts of the country by checking the MOBIS contract prices offered to the federal government.  This is a useful way to get a credible ballpark number for setting prices.  Further,  you will see what types of services are being offered and how they are bundled.  http://www.gsa.gov/portal/content/245439

Thanks for reading,

Kim