Do you ever wonder why certain small businesses thrive without spending money on traditional advertising while other businesses with big budgets struggle to stay in the black?
The answer will surprise you.
Marketing is no longer transactional. In the old days you bought an ad and waited for customers to walk through your door. The world moved on. Social happened. Targeting happened. The internet increased access and options for small businesses. Traditional ads didn’t keep up. That brings us to the truth magazines, newspapers, and other media outlets don’t want you to know.
Traditional advertising doesn’t work for small business.
Don’t believe me? Consider this before committing to a several thousand dollar strategy: What does the newspaper or radio do to attract new customers to your business?
Traditional ads for newspaper and radio advertising promise:
Increase in name recognition
Drawing customers to your business through incentive
It doesn’t make sense for small business. Here’s why:
The radio is everywhere so everyone will hear it. Newspapers are delivered to the doorstep of thousands in your area. It sounds great. These outlets will try to sell you on their reach, saying they can put your businesses name in front of a multitude of potential customers.
But how many of those customers are actually a good fit for your business?
Let’s look at Maeva’s Coffee and its 3,000 weekly visitors. When our customers found us, most googled “coffee shop Alton”. They were actively looking for our shop.
When was the last time you were stuck in traffic and looking for a new beauty salon? How many of your current customers can only be reached by the daily newspaper? Sure, your name might flash past thousands of people- but, dollar for dollar, your advertising potency is diluted because it isn’t reaching the right people at the right time.
National brands make traditional advertising work because they spend thousands of dollars for exposure. As a small business owner, you can’t afford to pay for the amount of exposure you need to make a difference in your revenue.
Most advertising incentivizes listeners with special offers or a coupon.
Coupons are a terrible way to promote your small business. You think you’re doing something smart, giving people a tantalizing offer they can’t refuse.
This is the problem: 99% of small business owners already operate with a tiny profit margin because they are undercharging for their product or service. When you offer a coupon, you’re communicating to your market that your product isn’t worth what you normally ask.
This isn’t just a problem with traditional advertising. Even small business owners who are savvy enough skip the newspaper ad don’t understand the psychological way coupons kill business. My Facebook newsfeed is full of local businesses offering “$1 this” or “half off that”.
Coupon clipping doesn’t work for small business!
If you want to entice someone into trying your small business- give it to them.
The Power of Gifting
This is the most powerful advertising advice I was ever given: If you can’t afford to give it away for free, don’t give it away at all.
Think about the difference between giving something away for free vs. giving someone a discount.
A discount signals:
You’ve overpriced your product/service to afford the discount you’re giving
Your product/service is lesser quality than your competitors
Giving something away signals:
Hospitality and gratitude
You’re business is successful- you can afford to be generous!
You’re so confident the giftee is going to love your product/service, you’re willing to treat them on your own dime
An advertising strategy that is welcoming, generous, and confident? Absolutely! It sounds great, but most small business owners don’t utilize the power of gifting because of risk.
Gifting and Risk
Gifting something for free can feel like a huge risk when compared to giving a discount. If the customer never returns to purchase, you’re out 100% of cost rather than just a portion.
The key to turning gifting into an acquisition rich advertising strategy is to do it thoughtfully. Here’s a quick breakdown on how to create a winning, generosity-focused advertising strategy:
1. Think about your best customer
Take a moment to jot down a few notes about your best customer. This is the customer who loves your business. They visit so often, you know them by name and have their order half prepared as they walk through the door. Or they book your service out months in advance. This is the customer you want more of- and they’re called your target market.
What does your target market look like- what is their age, personality type, gender, or income level? What do they like to do? Mapping out core attributes will help you zero in on who you want to reach and how.
2. Reach out to ONLY your best customer
Don’t waste energy or time developing a strategy for a market that isn’t your best. By focusing in on your best potential customers, you reduce your risk of gifting product or services to people who aren’t as likely to become true fans.
This seems like common sense, but, have you ever given something from your business out of guilt or expectation? I have. Our coffee shop is petitioned for school program ads, gift cards for silent auctions, and baskets for fundraisers at least three times a week. In the beginning, I felt like I had to give to everything or a wasn’t a good community business. Now, I decline most of the time. Why? Giving to community causes is another way to advertise. As an awesome business owner, it's your responsibility to weigh the cost of the reach against its viability.
For example, if your target market is professional females, perhaps it makes sense to give a gift basket for the silent auction at the local women’s empowerment conference. Better yet, connect with the conference coordinators and offer a free gift card for preregister packets. However, giving to the local animal shelter might not as closely align with your desired reach.
My strategy for guilt-free fielding of donation requests? Either set an annual budget OR choose in advance which charity you’ll support for the year. By deciding in advance, you make it easy to gracefully decline requests. When arises that isn’t in your perimeters, thank the person for the opportunity and say , “I appreciate you thinking of us! This year, we’ve chosen to support the (________) foundation as our non profit this year.”
No one is going to hate you for not giving them a free gift card. As a small business owner, you have to make the decisions that align best with your market.
3. Determine your budget- and stick to it
This is ultimately how you reduce your risk in a gifting strategy.
When a local college approached us about putting materials in their new student welcome packets, I saw a brilliant opportunity to reach a new market. I wanted to give away drinks (not discounts) and was willing to gift $250 as 50, $5 gift cards to incoming students.
The college wasn’t keen on it because they wouldn’t have enough cards to give to every student. They suggested $1 off coupons instead. I declined and secured permission to give the gift cards (along with a map that detailed our hours) away by hand on campus.
The result? That semester, our week night traffic was booming with a healthy population of students seeking free wifi and a quiet place to work.
Before handing out anything, I knew the total advertising cost for this was going to be $250 - plus a few printed cardstock maps. $1 coupons would’ve compromised our brand and wouldn’t have packed the punch of a fully comped drink. Offering enough gift cards for each student’s welcome package was out of our budget. By reducing our reach, dollar for dollar, we saw a great return and hit our perfect market.
Reconsidering traditional advertising but still want a way to get your business in the hands of your best fans?
Check out “Does Spending Money on Facebook Really Work?” and watch for my upcoming post on how to craft awesome non-salesy advertising strategies for your small business.