Archive for June, 2011
Management Mistake in Small Business: No Investment During Trying Times
Today more than ever, small businesses are struggling with questions of appropriate allocation of resources. When money is tight, the decisions as to how to allocate it often fall on the accounting department or the owner, who may well not be financial planners or investors. The common strategy during hard times is to use funds to brace against financial disaster. While this might make perfect sense, it can also be a way to almost guarantee that your business continue to run at a loss. During hard times, small businesses may need to shift the focus of their costs and expenses, but in a different way than might be apparent. Making investments good, solid investments—instead of pulling out of the market further due to perceived lack of resources—can be the golden ticket that allows a small company to survive financial hardship.
One such investment that often suffers during economic hard times is investment in marketing and infrastructure. In marketing, this may include scaling down or elimination of web marketing, targeted print advertising, tradeshow activity, and telemarketing. In infrastructure, this may include elimination, scaling down, or non-implementation of key business growth factors, like scooping up talented sales staff that are laid off elsewhere and investing in inventory and cash-flow management systems that help you stay profitable and allocate funds where they will draw the best return on investment.
The investment in marketing and the investment in infrastructure actually go hand-in-hand in many cases. For example, an expense management system will allow a business to identify waste and areas for improvement, thereby allowing the company to allocate funds in a more meaningful, results-driven way. Hopefully, this will help you spend less on phone bills and more on investments that will yield returns, such as marketing campaigns.
As difficult as it can be for small businesses to survive an economic downturn, forward-thinking actions are truly the only way to stay afloat. The more you withdraw from marketing activity, the more you risk a serious cash-flow problem. It is precisely when your regular, returning customers aren’t coming in as often—or at all—that you must find ways to invest in bringing in new customers and increasing the efficiency of your organization. What investments are most important? Here’s a short list:
- If you do not have one, implement a professional-quality inventory management system. This will help you keep inventory small but in line with customer demand.
- If you do not have one, implement an expense management system. Track all your expenses in a way that can be evaluated using multiple criteria, and identify waste within your organization
- If you are not already doing so, attend at least one tradeshow a quarter. Choose tradeshows in which the participation cost if not exorbitant.
- Invest in search engine marketing and web marketing. Online marketing is the best way to get the most out of your marketing dollar, or the best bang for your buck.
Most importantly, remember that there is no time like the present to make your name known, to win new clients, and to chase new opportunities.
Read More…
- Back to Basics Marketing
- Marketing as Company Wide Responsibility
- Mobilization: Reaching Outside the Marketing Department
- Advanced Lead Qualification: Sales and Marketing Work Together
- Sales’ Feedback into Marketing: Profiling Prospects and Their Problems
- “Inside Marketing”: Marketing to Your Own Sales Organization
- Developing Unique, Customer-Focused Value Propositions
- How to Train an Entry-Level Marketing Employee
- When Return on Investment Doesn’t Paint a Full Picture
- Defining and Presenting Value Propositions in a Competitive Market
- Logos and Promotional Product Designs for “Difficult” Subjects
- Defining and Refining Value Propositions for Luxury Items
- Evaluating Return-On-Investment (ROI) for Tradeshow Activities
- You Are Here
Management Mistake in Small Business: No Investment during Trying Times
Evaluating Return-On-Investment (ROI) for Tradeshow Activities
Tradeshows are one of the most common campaigns a mid-to-large size company might engage in for the purpose of lead generation. Ask around, and you will find that for many companies tradeshows are the first or second lead-generating activity in terms of volume. The topic of effective tradeshow management is surprisingly complex, and the number of considerations is enough to fill an entire graduate level semester syllabus. One of the most essential topics, however, is the evaluation of return on investment (ROI) for tradeshow campaigns. As a marketing consultant, it never ceases to amaze me how often companies invest significant resources in a tradeshow, and then purport to evaluate the return on those resources via the number of leads generated at the show. Alas, this strategy is misguided, as the real measure of return on any investment in a for-profit company is profit, not lead count. Essentially, if you are going to effectively evaluate your return on investment for a tradeshow, you must be able to answer the following questions:
- How many leads were generated at the tradeshow?
- Over the course of your company’s average sales cycle, how many/what percentage of those leads converted to sales?
- What was the amount of profit generated from leads obtained at the tradeshow? (NOTE: You must subtract the cost of participating in the tradeshow to calculate profit.)
- What percent of all sales/margin is accounted for by leads generated at this tradeshow?
Until you can answer those four questions, you cannot effectively calculate return on investment from a tradeshow. Why is it not enough to know how many leads were generated at a tradeshow and use that figure to determine if you should participate in that tradeshow again? Because five hundred leads are worth nothing if none of them convert to sales. As a matter of fact, that would be a clear indication that there is not a good fit between your product or service and the attendees at the tradeshow.
What can you do if you are trying to evaluate a tradeshow in a period of time that is shorter than your average sales cycle, and you therefore do not have reliable profit data yet? There are a few more subjective measure you can use to evaluate whether or not to sign up for next year.
Here is a sample form that you can ask your tradeshow booth staff to fill out to allow you to make decisions about tradeshows before your average sales cycle is up, as well as evaluate your own performance in regards to tradeshow management:
_____________________________________________________________________
Rate Each on a Scale of 1-5:
__ Attendance
__ Lead Quality
__ Booth Location
__ Booth Staffing
__ Preshow Planning
__ Tradeshow Management
__ Display Effectiveness
What competitors were present, if any?
Recommend to Attend/Exhibit Next Time? Yes/No (Do not provide a maybe box, get a committed answer.)
Comments/Summary:
__________________________________________________________________________
This data, some of which is more subjective in nature, can still help to make a good decision as to whether or not to sign up for next year. Pay particular attention to the lead quality rating assigned by your staff, as this will be your best indicator as to whether a high conversion rate is likely.
Read More…
- Back to Basics Marketing
- Marketing as Company Wide Responsibility
- Mobilization: Reaching Outside the Marketing Department
- Advanced Lead Qualification: Sales and Marketing Work Together
- Sales’ Feedback into Marketing: Profiling Prospects and Their Problems
- “Inside Marketing”: Marketing to Your Own Sales Organization
- Developing Unique, Customer-Focused Value Propositions
- How to Train an Entry-Level Marketing Employee
- When Return on Investment Doesn’t Paint a Full Picture
- Defining and Presenting Value Propositions in a Competitive Market
- Logos and Promotional Product Designs for “Difficult” Subjects
- Defining and Refining Value Propositions for Luxury Items
- You Are Here Evaluating Return-On-Investment (ROI) for Tradeshow Activities
- Management Mistake in Small Business: No Investment during Trying Times