According to the Office of the United States Trade Representative, there are 30.2 million small- and medium-sized enterprises (SMEs) in the United States, accounting for nearly two-thirds of net new private-sector jobs and 47.5% of the private workforce in the country. They also represent 99.9% of the existing companies in the U.S. No wonder SMEs are considered the backbone of the economy.
If you are an SME owner, you are constantly doing marketing. Whether you like it or not, if you are selling something, you are doing marketing. Maybe you didn’t think it was marketing, but any time you communicate, display or interact, directly or indirectly, with potential customers, you are doing marketing. Every time you look for ways to improve your product or services, make a special offer, add value or simply convey a message, you are doing marketing. Marketing is everything, and as Peter Drucker might say, together with innovation, it is the essence of any business.
Why is it, then, that so many SMEs tend to use it as a communication tool only? It is true that marketing is about delivering a message and hoping that this message triggers a behavior that ends up in an act of purchase. But it doesn’t really finish there. Marketing activities consume one of the most relevant resources for the sustainability of the business: cash. As a business variable, marketing should deliver not only in terms of reach, impressions, positioning, knowledge transfer and interactions, but also in terms of business impact. In general, SME owners and entrepreneurs tend to adapt standard marketing practices into their own reality — and budgets — in an attempt to copycat, in a small version, what other, larger companies are doing. In this process, they also try to develop marketing management skills that they either don’t have or have in a limited way. And above all, they try to squeeze their marketing budget, if they have one, as much as possible.
But small business owners and entrepreneurs seldom do an economic evaluation of their marketing investments. In most cases, this is a recipe for disaster.
So, how can a SME start doing better marketing? Buckle up — it is not easy, but it definitively pays.
1. Set proper, measurable objectives.
By proper objectives, I intend to say those that have clear and countable performance indicators, have a clearly defined success threshold and are time-framed. These objectives must reflect all areas that marketing really impacts, including:
• Positioning: Marketing campaigns should know what we want the customer and potential customers to think about the company and the offer.
• Education: Marketers must also know what we want our target to learn about our company and the offer.
• Interactions: What do we want our audience to do?
• Cost: How much money do we want to invest?
• Revenue: How much money from each act of purchase can we attribute to our marketing effort?
• Return: How much money do we need to make with this investment?
2. Build your own attribution model.
I know it is tempting to use off-the-shelf software that delivers a final ROI number based on some sort of assumption or secret algorithm. But you also know that the return figures that those applications deliver are often twisted, unrealistic and unreliable. In order to have marketing that is impactful to the business, you will need to build your own attribution model for your type of industry and for the marketing activities you are planning to do.
A solid attribution model isolates the number of acts of purchase that have been impacted by your marketing and the influence of your marketing in your clients’ decision-making process. The only way to achieve this double-folded isolation is through traceability and quantitative research.
3. Plan your data collection.
It is not enough to plan your project; you also need to plan how you are going to collect the information about all the performance indicators you defined in your objectives. If you cannot collect information about them, you will never be able to know whether you reached your objectives or not. Additionally, you will not be able to evaluate your overall project performance.
You need to plan data collection prior to execution, the same way you bring your pedometer or start the GPS on your phone prior to going for a run. This data collection plan should include a clear definition of what you are measuring (KPI), who has the data, and how and when are you planning to collect it.
4. Generate business intelligence.
If you cannot use the information you gathered with each evaluation cycle to improve your future marketing — and business — performance, then you are wasting resources. Generating business intelligence is key to making future planning and more efficient marketing investment decisions. Conversion ratios, historic results and monitored performance are all tools that will allow you to link marketing inputs to business outputs.
Overall, the best way to improve your marketing is by linking it to the business in a robust and credible way. Marketing should not only be about reach, impressions and interactions. It should also be about economic, tangible business results. After all, you cannot pay salaries with social media followers, raw material with purchase intent or net promoting scores. Would you distribute dividends in the shape of “likes”?
If you are a business owner, you already know how to reach your audience and engage with them. And if you don’t, you can figure it out, or you know where to find resources to do it. The question is, do you know how to link your marketing impact to your business bottom line? If you don’t, you can start with these four steps.