Every new business owner asks the following questions:
- How do I get customers?
- What are the best ways to advertise my new business?
- How much should I spend on marketing?
The answers are not as complex as you think.
How do I get customers?
As a new business you need to let people know that you exist and tell them what value you can give them in exchange for their money.Remember, people want value and benefits, not products, services or features.
So for example, someone who sells drill bits should be thinking about the following: people aren’t buying a piece of steel with a cutting thread (a drill bit), they’re buying a uniform, specifically-sized hole in the wall. Someone in the future may invent a laser that does a better job than a drill bit, and put all the drill bit people out of business.
The emphasis needs to be on VALUE and BENEFITS.
I just watched an episode of Better Call Saul. In this episode, Jimmy takes a job in a cellphone store. Nobody comes to the store. Literally not a soul.
So Jimmy differentiates from all the other million cellphone stores and paints the following on the outside window for all to see:
Is the man listening?
Privacy sold here.
He encapsulates value and benefit in the single word: privacy.
Think long and hard about what you are REALLY selling and then make that your primary message.
Right, now that you have your messaging sorted out, let’s look at where your potential customers are hanging out and what marketing channels you should be on.
What are the best ways to advertise my new business?
Google Paid Search: Your potential customers are searching Google right now for the solutions to their problems. You need to advertise on Google.
My advice is to start with Google Search ads and NOT Google Display advertising.
Google Search ads are the ads you see appearing in the Google search results. Google Display advertising are banner and video ads you see on publications that are part of the Google Display Network. The popular news sites you read all show Google Display advertising.
Why do I prefer Google Search ads? They are shown to people who have a HIGH INTENT of buying from you. They offer solutions to people who are actively searching for a solution to a problem. Google Display ads (like social media ads) are INTERRUPTION ads: they are shown to people who are busy doing other things (reading an article, watching a video, scrolling through a social media newsfeed) and NOT in search, discovery or buy mode.
Facebook and Instagram Advertising: Most of your potential customers are most likely on Facebook, or Instagram, or both. Paid advertising on these channels is going to bring you good quality leads and customers if you get your audience targeting right.
Facebook and Instagram advertising works purely because of the sheer number of people who are constantly on these platforms. Yes, it’s INTERRUPTION advertising (people are scrolling or watching a video, not actively searching for a solution to a problem, but you can still generate a SIGNIFICANT portion of your leads, sales or contacts through paid social media advertising.
Social media advertising also helps create AWARENESS of your brand, product or service.
The TRUE POWER of social media advertising, however, exists because of HOW MUCH THESE PLATFORMS KNOW ABOUT PEOPLE.
Every time you click on a post, like a comment, watch a video or do ANYTHING while on Facebook or Instagram you are TEACHING THE ALGORITHM and giving info to the Facebook Advertising platform ABOUT YOU specifically. This allows advertisers to create very specific audiences who are most likely to respond well to the specific product or service they are selling because these ads are RELEVANT to people.
You can target people based on interests which match what you are selling. You can also target people who have previously visited your website (you can do this with Google Ads too) and you can target people who are SIMILAR to your existing customers (you do this by creating a CUSTOM AUDIENCE: upload a list of your customers email addresses to the Facebook Advertising platform, and the platform will automatically find similar people. This is called a LOOKALIKE audience).
You need to TEST what works best for you – some products or services sell really well through paid social media, others perform better with Google Paid search, some require both.
The KEY THING is to use the data to test, learn and optimise your advertising budget.
LinkedIn advertising: your business might do well to advertise on LinkedIn, but in my experience the cost per lead or cost per sale is a lot higher than other channels.
Paid advertising is the first step in getting customers. You build a website and spend money on advertising to get people to visit your website and become customers. More on this below.
While that’s happening you need to be thinking about how to get organic traffic to your website.
Organic traffic is non-paid – word of mouth, SEO (ranking in Google naturally in the non-paid search results), non-paid social media, publicity, links on other people’s websites to your website and offline marketing are some of the ways you can get organic traffic to your website.
How much should I spend on advertising?
Want to know a secret? It doesn’t matter how much you spend on advertising – if your CONVERSION FUNNEL is messed up you’re going to waste every cent.
Conversion is MUCH MORE IMPORTANT than traffic. Anyone can buy traffic. I can take your entire marketing budget today, put it into a Facebook ad, get you thousands of visitors and you can end up with ZERO customers and ZERO sales. I can walk away with my commission and move on to the next victim. Sound cool? I didn’t think so.
You HAVE to be constantly thinking about how to streamline the entire customer journey from the time they click on your ad to when they take out their credit card and pay you.
This is true no matter what business you’re in: tattoo parlour, dropshipping store, print on demand business, physiotherapist or garden services.
You MUST change your mindset from “I must advertise to make my business grow” to “I must optimise my conversion funnel to make my business grow”.
People who talk about CONVERSION RATES really annoy me – what exactly do you mean by conversion rate, person?
Conversion rate could be any of the following:
- Visitor to lead conversion rate
- Lead to sale conversion rate
- Visitor to purchase conversion rate
- Add to cart to completed order conversion rate
You have to be VERY specific when you talk about conversion rate, please people…
Let’s look at how important conversion rate is, by way of example.
Let’s say you sell golf clubs. You bought them for $50 each and you sell them at $100 each Your gross profit per sale is $50 (selling price minus cost price). You spend $1,000 per month on paid advertising and you get 5,000 people to your website from these ads. Of 5,000 people who visit, 10% (500 people) add something to cart. Of these 500 people, 10% buy a golf club, and 90% abandon the shopping process.
Number of sales per month = 50
Number of cart abandonments per month = 450
Let’s look at some important metrics:
- Cost per click = $1,000 divided by 5,000 clicks (visitors to your site) = $0,20
- Visitor to Add to cart % = 10% (500 out of 5,000)
- Add to cart to completed sale % = 10% (50 out of 500)
- Visitor to Sale rate = 50 out of 5,000 = 1%
- Cost per Sale = $1,000/50 sales = $20
- Net profit per sale = Selling price – (cost price + cost per sale) = $100 – ($50+$20) = $30
This is not a bad situation to be in: you are in the GREEN after advertising (assuming you have no other overheads or taxes or shrinkage etc).
You are technically in business and making a profit from each sale.
HOWEVER, do you see how your profit can get affected by the following:
- Cost per click: if your cost per click increases this will eat into your net profit
- If your visitor to add to cart % decreases this will eat into your net profit
- If your cart abandonment rate increases this will eat into your net profit
Your business might have different metrics. You might have a cost per enquiry. You might have cost per contact. You might have cost per sale.
It is absolutely critical that you identify these important metrics and monitor them closely. Every day. This is the data-driven way of doing digital marketing. You are here to make profit as a business, not make Google or Facebook richer.
There are many ways you can get traffic to your website. These include organic (non-paid) methods including SEO, word of mouth and referrals. You can run paid advertising on a number of advertising platforms.
The key things to remember are:
- Keep track of the important metrics for your business (cost per sale, visitor to lead, lead to sale etc)
- Have a good MIX of traffic sources
You don’t want to have all your traffic eggs in one basket.
Imagine your business got 100% of its traffic from SEO and suddenly Google updates its algorithms and suddenly you drop in rankings and your business goes from hero to zero (I personally know MANY people who have had this happen to their businesses – I’m looking at YOU insurance affiliates…). What if the competition in Paid Search suddenly got really fierce and the cost per click tripled – how would this affect your net profit? What if Facebook suddenly decides to shut down your advertising account because it changes its policies?
Have a good mix of traffic sources. I like to think it’s possible and desirable to have:
- 30% of your traffic from SEO (organic search)
- 30% of your traffic from paid search (Google Paid search)
- 30% of your traffic from paid social media (Facebook and Instagram, perhaps some LinkedIn)
- 10% of your traffic from other (organic social, word of mouth etc)
Your job is to monitor your marketing mix and adjust your efforts and spend so that your business is both profitable and has a healthy mix.
Good luck and let me know if you have any questions in the comments below.