Some marketing blunders are almost impossible to see coming—let alone avoid. Take Nike, USPS, Oakley, and Lance Armstrong as an example. Aside from an inner circle of elite cyclists, who would have thought that Armstrong was lying through his teeth when, over the course of a decade, he vehemently denied using—or ever having used—performance enhancing drugs? Do you think the CEO of Nike knew that Lance had more pharmaceuticals in him than a drugstore? I don’t.
Speaking of cycling blunders, check this out:
Back to business. Fortunately, most small business owners have a greater chance of getting trampled by a rhino while driving to the office than they would having the advertising budget required to sponsor the next Lance Armstrong or Tiger Woods. Unfortunately, there are still plenty of marketing catastrophes available to the uninformed business owner.
In this blog post, I’m going to tell you three that are especially disastrous—and how you can avoid them.
3 Disastrous Marketing Blunders
Marketing Blunder #1: Relying on Gut Intuition to Make Advertising Decisions
I think it was Alec Baldwin’s character on 30 Rock that said, “advertising without analytics is a waste of time—like learning French or kissing after sex.” Come to think about it, he might have been talking about meditation, not advertising without analytics, but you get the idea. When it comes to advertising, no mistake is greater than relying on gut intuition to make decisions. Business owners who don’t accurately track their advertising almost always tend to over-invest in some campaigns and WAAYY under-invest in others. I don’t have data to prove this claim, but I’ve personally noticed that the campaigns business owners tend to over-invest in are those that deliver the largest ego boost—seeing your mug on TV, hearing your voice on the radio, etc.
Marketing Blunder #2: Not Accurately Calculating the Lifetime Value of a Customer
Failing to accurately track your advertising can lead to some seriously terrible marketing decisions, but equally problematic is not knowing the lifetime value of a customer. In my experience, most business owners drastically underestimate the lifetime value of a customer. I once had a residential plumbing and HVAC company owner tell me that $100 was the most he’d be willing to pay for a new customer. When you consider the gross margins, the average revenue per job, and the frequency of referrals and repeat business for the typical residential plumbing and HVAC company, you realize that this is an absolutely ridiculous answer. And it’s indicative of a business owner who doesn’t know his numbers—starting with the lifetime value of a customer.
Marketing Blunder #3: Performing A Full Cost Analysis Instead of Thinking “On The Margin”
For a profitable company that has capacity, wants to grow faster, and is trying to determine what it can afford to pay to acquire a new customer, there’s no need to consider fixed expenses. In this situation, the analysis should be done “on the margin.” A dentist once told me that the most he’d be willing to pay for a new patient is $50—a number I thought was ridiculously low. When I questioned him, he said, “I can’t pay more than $50 for a new patient because of all the overhead I have—office space, my dental hygenists, the autoclave, etc.” The thing is, he has all the costs whether he has one additional patient or not. This is an example of a business owner doing a full cost analysis on each new sale vs. looking at things on the margin.
How to avoid this marketing mistake:
Set up your income statements correctly
If you’re profitable and have capacity, learn to ignore fixed expenses and practice thinking “on the margin”
Final Thoughts & Takeaways
These aren’t the only marketing blunders made by business owners, but they are three of the most common ones and they’re all easily avoidable. Before you create an advertising plan, make sure you put the right analytical tools in place, calculate your Customer Lifetime Value (CLV), and get comfortable with thinking on the margin when evaluating what you might pay to acquire one new customer.
If all this sounds too complicated, you can always revert to hiring Lance—I’m pretty sure he has some free time on his hands. Hell, he might even hook you up with a discount!
About The Author: Ben Landers is the President and CEO of Blue Corona, a data-driven, inbound internet marketing company. Submit an inquiry to book Ben to speak at your next conference or event.
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