Is your business growing slower than you think it should? Do you suspect its slow pace might have something to do with ineffective marketing? Most entrepreneurs feel their business should be growing faster, but few know how to isolate the problem. Today we're going to fix that.
The elements that affect the growth of your business will fit into one of four distinct categories. Understand these categories, and you'll have a solid framework for self-examination:
1. Share of Voice
What's your percentage of the total exposure for all the businesses in your category? How much of the total signage is yours? What about TV advertising? Radio advertising? Newspaper? Direct mail? Web traffic? If there are news stories related to your category, do they mention your brand or someone else's? What percentage of the word-of-mouth advertising is yours? Each of these things contributes to your total share of voice.
Share of voice can be purchased. But be careful--most advertisers attempt to reach too many people. A message of true importance needs to be delivered only once to be remembered. But is your message really that important to your customers? Is it safe to assume your message will be remembered after being heard only once or twice? Problem: You're reaching too many people with too little repetition. Solution: Buy more repetition from fewer vendors.
Tip: Be an important advertiser to one or two audiences instead of an invisible advertiser to three or four.
2. Impact Quotient
I've never seen a business fail because they were reaching the wrong people. But I've seen hundreds fail because they were either reaching too many people with too little repetition or delivering a message that no one cared about. You're going to be surprised how many people suddenly become "the right people" when you begin delivering a more impressive message.
To be impressive, your message must first be believable, so close the loopholes in your message:
Loophole open: Advertisers often cry, "Everything Must Go!" But the listener is thinking, "Or what? What happens if you don't sell it? You'll just come up with some new angle next week, right?"
Loophole closed: "Everything must go! Any jewelry not sold by the end of the day will be melted down and sold as scrap. This means that until 9 o'clock tonight, you can buy finished jewelry for slightly more than the value of the raw materials."
3. Personal Experience Factor
Are you exceeding your customer's expectations or falling short? Do you have the brands they prefer, or are you pushing a weak alternative? Are your prices higher or lower than your customers expected?
A strong ad will only temporarily prop up a business that delivers a weak personal experience factor. Remember: Unimpressive reputations nullify impressive ads. Have you been trying to solve an internal problem with external advertising?
4. Market Potential
What will be the total dollar volume sold in your product or service category this year? Do you know the total potential volume for your trade area? What percentage of that financial pie is yours? If you don't have access to this information, there are two easy ways to get it:
- Carefully list every competitor you face along with your best estimate of their sales volume in your trade area. This can usually be done with a reasonable degree of accuracy. How many employees do they have? How much inventory? Square footage? Estimate objectively, and don't leave anyone out.
- Contact a trade organization or use Google to find a figure for total, nationwide sales volume in your category. Divide that number by the population of the United States (currently about 298,500,000) to get a per capita sales volume. Multiply that number times the population of your trade area. I think you'll be surprised how close the two numbers are.
It's easier to grow small businesses than large ones. Show me a business selling only 5 percent of the market potential in their category, and I'll show you a business with huge growth potential. Show me a competitor eight times as large--one that's currently selling 40 percent of their market potential--and I'll show you a business that's going to have to work very hard to hang on to what they've got.
Uncommitted customers are the easiest to steal. Consequently, early growth comes with less effort than later growth, when the low-hanging fruit has all been picked. The business selling 40 percent of their market potential must now fight to win those customers who have some degree of loyalty to a competitor. Rarely does a business achieve more than 40 percent of the total potential volume in their product or service category.
Examine your business through the four lenses of share of voice, impact quotient, personal experience factor and market potential, and you'll quickly identify what's been holding you back.
Advertising can't change your personal experience factor or your market potential. But a focused media plan will dramatically improve your share of voice, and better ad writing will dramatically increase your impact quotient.