Business owners have a lot of things to think about, marketing just being one of them. With so much going on, it’s easy (and common) for some key facets of marketing to go deliberately ignored, or worse, completely unnoticed. To help you focus on the key decisions that matter, here are the 3 steps to follow in formulating your ongoing small business marketing strategy. While this guide is just an overview since it’s impossible to fully spell out marketing strategy in a few pages, hopefully it will provide some food for thought and a framework to play with. Happy strategizing!
Before we dive in, note that the title of this post says “ongoing”. This is because your strategy will always be evolving and you should continually evaluate it. I recommend spending an undisturbed, productive hour or two each quarter thinking about marketing strategy, and spending significantly longer in Q4 or Q1 when you do your annual planning.
Step 1: What is my business goal for the next year? The next 5 years?
The first step in figuring out your marketing strategy efforts is to actually look well beyond the confines of marketing and instead look at the big-picture goals for your business overall. Only by first having a sound understanding of your business goal can you evaluate how marketing should best fit in.
Most business owners use a revenue-based goal but some use a market share- or profit-based goal. Other business owners have the goal of “adding new product x” or “entering industry y”. I view these as intermediary “means” goals rather than final “end” goals. They can (and should) be a part of your thinking but they’re more like components of your strategy in order to reach your final “end” goals.
Regardless of what “end” goal you’re using, try to quantify it, and then see how realistic the goal is. For example, “The goal is to grow from a $10 million company to a $50 million company in 5 years”. I like stretch goals that are also on the upper edge of realistic. So, if your goal is to go from $10 million to $50 million in 5 years, this means you need to grow at x rate annually where x can be solved by 10,000,000*(1+x)^5=50,000,000. This is about 38% annually. There are various online resources to automate calculating this requisite compound annual growth rate.
Is a 38% annual growth rate realistic for your business? How does this compare to the past several years of actual growth rates? Are there big pockets of untapped potential in your business to achieve this growth? Depending on your answers to these questions, you may want to adjust your goals accordingly.
Also think about the number of customers you need to support your goal, and what you’re willing to spend to achieve this. Put differently, what is your maximum cost of marketing? Ideally, you should be able to say, “My average customer spends $200 per year and remains a customer for 5 years, so my average customer lifetime value is $1000 (not counting the time value of money). My margin is 10% so I’m making net $100 per customer. I’m willing to spend up to half of this, or $50, to acquire a customer.”
This $50 is your maximum CPA (cost per acquisition), which will be helpful later in evaluating specific marketing channels and tactics. If you think a particular tactic will give you new business but you estimate it’ll cost you $150 to do so, then you probably don’t want to use this particular marketing tactic since it takes all of your margin and then some.