Last year in the UK, businesses spent over £19 billion on advertising alone, which is a 5.4 per cent increase on 2004.
The biggest area of growth was internet advertising, with the first six months of 2005 seeing expenditure hit £490.8 million, up 62 per cent compared to the same time the previous year.
Spending in all other marketing areas has increased, showing British companies are spending more than ever before on trying to increase revenue.
However, with a lot of budget allocated to generating interest and enquiries, is the majority of it wasted if the firm receiving the enquiry then does nothing about it and has no idea from where it was generated?
For example, can an independent plumbing firm in London afford to spend nearly £10,000 on a full page advert in the Yellow Pages if they have no way of calculating if the advertising costs per sale were at a level to warrant repeating the advert?
Can they afford to keep running the advert, even if it produces lots of enquiries, if they are not being translated into sales?
Don’t let leads go off
There is little point in generating more leads and enquiries from advertising etc if the company’s existing conversion process results in most of the hard-won enquiries falling through the cracks.
According to David Oliver from the consultancy company Insight Marketing, sales enquiries are like warm milk – they go off:
‘Speed of response is everything when it comes to enquiries. The Marketing Guild conducted a survey of 192 advertisers in eight trade journals and found that only 55 per cent of enquiries were followed up with the remaining 45 per cent being ignored.
There is an inverse relationship between enquiries and sales meaning the longer the time between initial enquiry and follow-up, the less likely the enquiry will lead to a sale.’
Too many tradespeople are generating a lot of leads and prospects but are unwittingly losing up to 95 per cent of their sales.
The business may not actually need to employ additional marketing techniques, instead it needs to conduct a complete audit of promotional activities to find more cost effective ways to increase revenue that will bring them the most return on investment.
Much better systems for converting a larger proportion of prospects into customers and reducing wastage are also needed.
Quality not quantity
The aim should be to receive the level of enquiries that a business is able to quickly respond to. Too many enquiries could actually be damaging to the tradesperson’s business if they take too long to respond, especially as the potential customer will have contacted competing businesses in the area.
If these competitors are quicker to provide a satisfactory quote they will not only get the job, but also be recommended to others.
The ‘most return on investment’ is therefore the most amount of revenue generation, not the number of enquiries.
For example, a sole trader electrician might allocate £500 to the promotion of his business and needs to decide how best to spend this money.
A direct mail drop in the surrounding neighbourhoods has the potential to help build up a good local reputation and generate qualified leads, which is important as wasting time on unqualified leads is a primary factor that can affect sales success as not everyone is a prime prospect for the electrician’s services.
The electrician could be busy all day talking to people and communicating in all the suitable places but he will not convert sales unless he concentrates on qualified prospects, rather than offering his service to people who are unreceptive, not ready for, cannot pay for and are disinterested in what he is offering.
However, the disadvantages are the time taken out of the working day to design and deliver the mailer when he could be working on revenue-generating jobs and also the limited number of people who will actually see and pick up the mailer or keep it for future reference if they need some work completing.
Another option might be to advertise in regional press and magazines. The advantage of this is the high circulation meaning the advert will be seen by many so even if the return rate is low, some sales should be generated.
So what if many leads are generated?
Can the electrician cope with trying to respond and then actually carry out the work within a reasonable time frame if the quote is successful?
Will he remember to ask each caller where they heard about the business and its offering so an idea of advertising costs per sale can be calculated?
The cost of the advert also means that the electrician may only be able to afford to advertise once, meaning little opportunity to stand out from competitors and little chance to create a lasting impression with readers.
The £500 budget could also be spent increasing the professionalism of the business through creating a website, business stationery and joining a trade association that properly vets its members and helps them generate new business.
However, all these marketing methods have the potential for enquiries to be lost or forgotten as they rely on the enquirer telephoning the tradesperson and inevitably waiting for their call to be returned with a quote.
If the electrician is driving for instance, he may not be able to write down the number properly, take the exact job description or fully concentrate on the caller and sound properly interested in the job.
Through belonging to a trade association the business will be vetted and then eligible to appear in various business directories.
‘A percentage of our profits are set aside to reinvest in marketing the company but as our target audience is so large our marketing is a bit like trying to spread the last of the butter onto your toast – we can’t afford to be wasteful but we don’t want to leave any areas uncovered,’ explains Paul Trace, MD of Tuscan Foundry Products.
‘Our marketing mix is based on how cost effective each method is and the amount of time before we are likely to see a return. All enquiries into the company are kept on a database and we always ask where the enquirer saw our details.
‘Once a month we look at where the sales have come from but we do not break it down into costs per sale as this can be misleading.
We try our best to follow up all enquiries and to draw as much feedback from enquiries as possible although it is inevitable that some do slip through but we try to use our limited resources as best as possible.’
However business owners promote themselves, there are some important elements worth remembering to ensure they are making the most of their marketing mediums.
Firstly, testing of a chosen method is very important before fully committing, especially as budgets will be tight or practically non-existent.
Researching new and innovative ways to generate sales leads is important, rather than just using tried and tested methods that invariably competitors will also be implementing.
Most important is the need to track where leads come from so return on investment can be calculated for future allocation of promotion budget.
Lastly, marketing and promotion does not end with receiving the enquiry – these should be dealt with properly and efficiently to ensure the reputation of the business is upheld and scarce resources are not wasted.