FAQ - Learn marketing
Every business promotes itself, whether it realises it or not. There are obvious things like advertising in the Yellow Pages, websites or the decal signs on work vehicles. But there are less obvious things, like the way you present yourself and the way you treat your customers. Finding new ways to keep your customers happy keeps them choosing you, improves their reports of your services to friends and family (“word of mouth”) and increases income. So if we told you of new ways to keep your customers happy, for example, that would improve your marketing.
From the business perspective, marketing is a game of numbers. Here’s an example:
Say you advertise in a newspaper with 100,000 readers - but only some of these readers need a plumber or look at the ads. Your weekly advertisement costs $800. Only 1 in 100 readers might look at your ad closely. And out of these, only 1 in 100 both need your services AND are persuaded to choose you. This might give you 10 customers a week from the advertisement, bringing in, say, $2500 in income for time and call-out charges. You have made $1700 from the advertisement, less your overheads for the work, say for example $500. You have made a $1200 clear PROFIT from running that ad.
Now look what happens if you increase the EFFECTIVENESS of the same ad. Imagine increasing the effectiveness of the ad by a relatively tiny amount. Imagine that 1.1 readers in 100 look at the ad closely, and that 1.1 in 100 of these are persuaded to buy. This adds only 0.002% to the total readership taking you up on your ad. But suddenly this tiny change has given you not 10 customers but 12. That might bring in $3000 from the same $800 ad. Less the cost of the ad and overheads, your clear profit has increased to $1600 from $1200.
Did you notice what happened to the profitability? Adding that tiny 0.002% to the total readership effectiveness increased profits 33%! Out of 10 customers from one ad in a week, adding just another 2 increases profits by a third.
It’s just an example, but you can scale the concept for any plumbing business in any city. It could be daily ads in a city of ten million, or it could be monthly ads for a town of ten thousand. The idea is the same. It’s also the reason why some businesses choose to run larger ads – the increased space can be more effective, and create greater profits, than the extra space costs.
And, of course, this is the same reason why businesses choose to consult advertising and marketing agencies – because the increased effectiveness of their strategies creates greater profits for the hiring business than it costs in fees. The idea is that the business makes more money for hiring the agency than it could have made without it.
Spending money wisely on marketing your business isn’t just an expense or a cost, it’s an investment in future income. Getting an agency helps you grab all those extra opportunities you might otherwise have missed out on. The very idea is that money spent on marketing should bring more money back. Done properly you should not just get more money back, but be in a position to maximise the amount of money you get back.
Traditionally advertising agencies created advertisements, provided research, and bought media space. They tended to work on commission.
These days we tend to cover the entire promotion of a business – that is to say, the marketing, advertising and public relations. So even the marketing strategies, brochures, sales letters and websites of major corporations are also created by ‘advertising agencies’. We no longer tend to buy media space directly – most advertising agencies are aligned with a major media buyer. Think of it as ganging up – by combining the clients of several agencies, agencies have more leverage in media buying negotiations with TV stations, radio stations and newspapers.
We do not work on commission, rather we are paid for our time.