The Top Seven Marketing Mistakes

In my view, nearly all government statistics about reasons for business failures are nonsense.

Undercapitalization, inexperience, or poor management are usually blamed for all business disasters.

Of course, there can be one or several more causes that result in a business going "belly up."

However, from what I've seen, marketing mistakes are by far the primary reason businesses do not survive. This includes companies which consider themselves direct marketers as well as those who do not.

Here are the seven most common marketing mistakes:

1. Management treats marketing as a business expense or simply a department rather than a necessary business investment.

Solution: Marketing should be treated as the driving force of any company. It is the only function that brings in cash. The other major functions in a company are necessary. But they all spend cash. This includes the primary business departments of finance, production and research.

To market any product or service successfully, the company must do two things:

A. Provide marketing with sufficient resources

B. Put marketing at the heart of its business strategy

The whole company should be focused on the needs and wants of customers and be prepared to satisfy their demands.

Marketing must be part of the philosophy of all entrepreneurs and managers.

2. Management does not know specifically what it costs to recruit a new customer. Plus, there are no accurate statistics on the average customer lifetime value.

Without this knowledge, it is impossible to make sound decisions. You cannot determine how much to invest in marketing. If you spend more to gain a customer than their lifetime value, ultimately you will go broke. In the absence of this information, many businesses can and often do fail. To make matters worse, few of the casualties understand why they failed.

Solution: Before you invest large sums on marketing, determine the average lifetime value of a customer. An excellent book that I highly recommend on this topic is The Loyalty Factor by Frederick Reicheld.

3. Management makes no attempt to build a customer database. This is especially so with most retailers, restauranteurs and department store owners. However, I've seen this in many other businesses.

Solution: A company's database of customers is potentially its biggest asset. It's much more valuable than equipment, inventory, etc. This is not only true of companies that utilize mail order or Internet marketing. Every single company that wants to survive and prosper needs to build a database.

4. The company does not communicate often enough with its customers. The result is lower sales and profits than are otherwise possible.

Solution: Contact your customers a minimum of once a month. When I started my first business at age 21, I too made many mistakes. The business somehow survived and became a chain of retail confectionery stores called Peterson's House of Fudge. At first I sent my customers an offer every six months. So I tried sending a sales letter every three months. My business doubled. I then began mailing every other month. My business again increased proportionately.

I wound up with the ideal and most profitable interval-- once a month.

At first I thought contacting customers every 30 days might be too often and that customers would get turned off.

But that didn't happen. I got great feedback as well as higher sales. Providing your customers like, or even love, your product or service, as they should, they want to hear from you frequently.

This, of course, is in the context of your sending excellent offers, excellent copy and excellent information.

Indeed, if you are not in frequent contact, your customers will quickly begin to forget about you. Many will start buying from your competitors.

I urge you to contact your customers at least every 30 days (occasionally with special offers a week apart is perfectly fine too).

Your form of contact can be an e-mail, postcard, catalog, telephone call or personal visit. I've found the most effective method of regular contact is with a well-written sales letter.

Rarely do I find a company of any kind which systematically mines the real gold in any business--the customer database. Make sure you do not make this mistake.

Making offers to your customer database is often referred to as the "back end" in direct marketing jargon. But every business should cash in on the huge potential of existing customers by simply making frequent offers to them and giving them more opportunities to do business with you.

5. Management has no method of accurately measuring the results from its advertising investments. This is especially so with so-called image advertising.

Solution: The way this is done is to seek a direct response in each promotion. This can be a coupon, telephone call or store visit. Code each promotion. Then when an order is received or a customer visits your establishment, you can appropriately trace it to the particular promotion.

The coding system can be numbers or letters. If you use the telephone you can utilize separate telephone numbers for each advertisement. Or you can simply ask the caller which ad or letter they are responding to.

6. As many companies begin to enjoy some early success, many develop a disease that I call "Big-Company-Itis." They start having endless, non-productive meetings. They become bureaucratic. They move as slow as molasses.

Instead of continuing to insist upon a high level of employee performance and keeping a close watch and control over costs, management takes its foot off the brake. Costs can spiral out of control. Employee morale can suffer. Soon the company is in deep trouble.

Solution: The secret is to think big but operate much like a small business. Well-managed, large organizations that are highly successful are run more like a small entrepreneurial business. Managers have profit center responsibility. Their job is to help increase revenue or reduce costs, or both. They are held accountable. They maintain the financial controls and quick response of a lean and mean small business.

7. Management has no systemized upselling procedure in place to upgrade both new and existing customers to a larger sale. Result? Lower sales volume and lower profits than otherwise could be obtained.

Surprisingly, companies I've observed that market direct to consumers, such as mail-order businesses, tend to be incredibly poor at telephone communications and upselling.

Well-managed and properly trained customer service people can add 30%-60% in added sales volume without any increase in marketing or administrative costs. Your only cost is the cost of goods sold. Best of all, your customers are the beneficiaries of more value and variety for their money. Everyone wins.

But here is where it becomes really interesting. Your gross sales will be much higher. But your net profit will increase by a huge multiple. I've helped companies achieve huge increases in their net profit just by learning effective and professional telephone techniques. It's not unusual to increase profits as much as 5 or even 10 times!

Effective telephone communications and upselling are the main reasons for the huge success of my own companies. My clients for whom I conduct training of their customer service representatives have experienced similar results.

Solution: Develop a strategy which includes the following:

A. Create an incentive compensation plan for your customer service representatives (CSR's) based on added sales. Depending on your profit margins, this can be for example 5% to 10% of additional sales.

B. Run a daily special offered as an "add on" that provides great value for the customer. For example, you can offer a new product at half price.

C. Prepare a verbatim script on how to present the special.

Tip: The selling price. Your special offer should not exceed 30% of your average order. This makes the decision to accept the special an easy one.

D. Provide your CSR's with some basic telephone training. This should include the principles of active listening, voice pitch, pacing, learning to present things in a hearable way, and some gentle closing-the-sale techniques. A big factor is learning the secrets of boosting the sales without any pressure whatsoever.

Regards,

Ted Nicholas

About The Author

Ted Nicholas is one of the highest paid speakers and copywriters in the world. He has sold over 4 billion dollars worth of products and services. Go to http://www.tednicholas.com to subscribe to his free ezine, "The Success Margin."

tnicholasdirect@aol.com

---

Listen To What The Marketing Experts Say

But more importantly, watch what they do. If you do... Read More

How to Use Marketing Judo to Beat Big Competitors

If yours is a small business and you have big... Read More

Independent Professionals: What Stands Between You and Your Artist Statement?

What Stands Between You and Writing an Artist Statement or... Read More

Marketing On The Cheap: Become a Joiner

Recently I wrote an article on the benefits of joining... Read More

Take The Test: Does Your Marketing Copy Sell?

Your marketing materials must grab your prospect's attention long enough... Read More

Integrity and Marketing - Finding the Right Balance

When marketing themselves to leads and prospects there are five... Read More

Making Networking Work

Several years ago, "networking" was the hot buzzword. Everyone was... Read More

Six Essential Principles for Marketing to Women Business Owners

Marketing to women entrepreneurs is not difficult. You just have... Read More

5 Tips for Getting the Most out of Exhibiting at Trade Shows

Exhibiting at trade shows can be a cost-effective way to... Read More

How To Successfully Launch A New Business Activity

I often talk with business owners who tell me how... Read More

Marketing Quandaries

Being in a quandary prevents you from moving forward in... Read More

Name the Top Cable Network

When Cable began as Community Antenna Television in 1948, all... Read More

Business to Business Direct Mail Sales Letters Need an Offer (and Heres Why)

In direct mail, the offer is the incentive or reward... Read More

Mission Statement Impossible

Dant dant da da dant dant da da. Dant dant... Read More

Networking: The Cost of a Connection

"Networking is a waste of time," said JoAnne, owner of... Read More

Get Results: Start with Your Marketing Message and Objective

Recently I was talking with a very bright traditional marketer... Read More

Is Most Marketing by Small Businesses KILLING THEM?

I just collected my mail. As usual, more than 80%... Read More

Differentiate or Die

Sounds pretty harsh, doesn't it? Well, I can tell you... Read More

Low-Cost Marketing With Postcards

Here's a simple way you can generate lots of sales... Read More

Are You Guilty Of Interruption Marketing?

You muted the commercials on the TV last night because... Read More

Chill Out With A Summer Time Marketing Plan

Is your business experiencing a summer time slump? Traditionally only... Read More

Why Pay for Online Press Release Distribution?

We've all heard that "free advice is worth what you... Read More

Big Ticket Marketing in 28 Minutes

I read an article recently about how many mainstream retail... Read More

How to Turn Your Marketing Into a Money-Making Machine - Preparing for Marketing That Yields Results

The usual complaint from companies is that Marketing simply does... Read More

Your Marketing Message

Your message is first among your weapons in the battle... Read More

A Quick Guide To Finding Reciprocal Links

Trading reciprocal links is one of the best ways to... Read More

6 Article Marketing Smarts: How To Get More Reprints And Exposure

Article marketing is the latest buzzword for marketers... Read More

Print Marketing Campaign, Whats Important and Whats Not!

Every company searches to lure customers to their product. Unless... Read More

A Point in Every Direction is the Same As No Point At All

Ever try to be something for everyone and find no... Read More

Promotions That Build Profit

Promotions are everything you do to let your customers know... Read More

Motivating Your Target

There's just no time to waste in a cyber day;... Read More

A Simplified Marketing Plan that Works!

When I started my first business in 1981, I researched... Read More

How to Make Profits With a Commission Mailing Business

There are many mailorder publications that will list... Read More