FROM MCWILLIAM AND POWELL
“Smart people learn from their mistakes. Wise people learn from others’ mistakes.” – Unknown
Mistakes tend to happen because of a lack of understanding. Sometimes it’s laziness, but often we just don’t know what we don’t know, or we forget. In this article, we’ll share six mistakes we see often in order to help you avoid their consequences.
These mistakes are:
- Focusing on tactics over strategy
- Having an “eat what you kill” mentality
- Discrediting reach campaigns
- Thinking that marketing is only about communications
- Having terrible messaging
- Inadequate use of distinctive assets
Focusing on Tactics over strategy
One of the biggest mistakes small business owners fall prey to is putting tactics over strategy.
Tactics are your four p’s: price, promotion, place, and product. Strategy, in the most basic form, is deciding what not to do. In order to deliver a product or service to a group of people at the right time, at the right price, and at the right place, your business requires a strategic plan. In other words, you need a strong strategy before you can implement tactics. You need a balance of sales activities and brand-building activities. You require a budget and good positioning. We jump the gun when we think that marketing is all about trends and channels.
Often, we desire a silver bullet, which is something that doesn’t exist. Psychology calls it “magic thinking.” We want to try something with limited effort and get a massive return. Most of us understand this isn’t how life works yet we still fall prey to this mistake. Why?
Reviewing the history of marketing and advertising we can easily conclude nobody can be trusted. We see countless campaigns and brands lose thousands of dollars, sometimes millions, because of advertising. At one point, advertising was seen as old school and as no longer working, leading to further problems.
If Facebook tells you that you can increase the reach of this post by 1,000 people if you “boost” it, would you do it? Of course, because Facebook will indeed provide you with 1,000 people to view your ad. However, don’t think this isn’t a sales tactic.
Advertising on social media because you want to reach millennials will result in lost resources, time, and value for your company. That is a silly mistake. As small business owners, you cannot rely on the channels telling you what you want to hear when using their platforms.
We get it. You need sales now, so you put on a fire sale. Crazy deals and a better price. That is what customers want, right? Sales come in, so you do it again. You see results, but perhaps not as good. You think to yourself, “Okay, let’s try again only this time, harder.” You do it again and now you have entered the sales death race. This is the race to the bottom, a game that small business owners cannot afford to play.
The consequences of conducting tactics over strategy are immense:
- Profit margins decrease
- Profits plummets
- Confusing messaging leads to less traffic
- Lost pricing power
- Advertising wastage
- Zero innovation of product
- Decreased value of the company
- Limited cash flow
We should ask ourselves the following questions before doing any tactical activities:
- What are my 1-2 marketing goals for this year?
- What products and services will I be focused on this year?
- Who will I be targeting?
- What position will I take within the marketplace?
Attempting to answer these questions without sufficient research will also result in poor decision-making. The headline of this section should really be ‘tactics over research,’ but nobody wants to do research (except for the leading brands?)
Having an ‘Eat what you kill’ mentality
The only sales that are coming in are the ones you brought in. Your sales grow when you put in the time to go and get them. This recipe works for businesses prior to the “inflection point” of growth. The inflection point is when a business exhausts all the organic growth it could acquire. The mistake here is keeping with what you are comfortable with.
Jim Collins talks a lot about ‘preserving the core’ and stimulating progress. This means the core of the business, the thing that got you to where you are today. It encompasses values, vision, and mission, and stays the same, though the way in which you fulfil your values and vision changes.
It’s important to remember that the company is not you, though it sure as heck feels like it. This is a major mistake that a lot of small business owners either neglect or ignore. Indeed, your business receives your blood, sweat, and tears. You have built it from the ground up. Still, you might have a feeling that you need to establish some freedom before you burn out. Perhaps you already have.
One of the many steps a small business owner can take to prepare to sell in the next five to 10 years is to replace the “eat what you kill” sales/marketing plan with a system that consistently and predictably results.
A major factor many buyers and investors look at when evaluating a small business is if the business is reliant on the owner for making sales. If the business is, that business will not be evaluated nearly as high if it wasn’t.
Think about it this way. Would you buy a business that is turnkey, where everything is built and you just have to turn the key? Would you buy a business that knows exactly how many dollars are coming in, though it might only be $10,000 this month, or would you rather buy a company that got $20,000 last month but has no idea what they will make this month?
As entrepreneurs, we see the opportunity to make another $20,000, but investors’ risk tolerance is much lower than yours. They will go with the $10,000 business every time.
Obviously, there are a lot of factors buyers and investors review when evaluating a business. The point here is the mistake of staying in the `eat-what-you-kill’ mentality. Eventually, you have dried up everything you could on your own. The reality is that your tribe has grown and needs more hunters. Perhaps you need more hunters and salespeople. The goal here is to think about replacing yourself with a system run by good people and good management, which is another factor buyers review when evaluating a business.
Discrediting Reach Campaigns (campaigns that reach the masses)
Usually, small business owners don’t have adequate resources to dump a bunch of money into advertising. Your marketing needs to be highly efficient so that you can receive returns that justify the investment. Reach campaigns, usually in the forms of TV, radio, billboards, or Youtube ads (non-targeted), are often discredited among small business owners because of the lack of measurement you receive.
However, reach campaigns tend to be the most cost-effective means of advertising for two reasons:
- The closer your ad is to a customer near the Action Phase, the more expensive the ad will be.
- If a customer has only a slightly positive perception of the brand, the cost to acquire a customer is greatly diminished.
Reach campaigns help bolster your brand as being the brand to use when the need for the product or service arises. Reach campaigns will often reach the out-of-market customers, the ones that are not consciously looking to buy right now.
Reach campaigns can also reach in-the-market customers. A customer that is in the Action Phase and has heard or seen your reach a campaign is just as likely to buy than if they were simply targeted, were you decide to place an ad near the Action phase. An example would be a google ad that shows up when a key search term is searched. “Liquor store <insert city>” and your ad shows up. Using both targeting ads and reach ads are best.
Thinking that Marketing is only about Communications
Too many business owners believe marketing is arts and crafts. It’s the situation where the owner will bring an ‘idea’ to the marketing team and say “do you think you can create this?”
Marketing is the art and science of taking something to market. You need to define the market in the first place, identify a gap, and position your brand as the one that has the ability to fill that gap. Marketing is more than just communicating your features or why buyers should shop for you. It’s about finding opportunities in the market places and bringing solutions to customers at the right place, the right time, and the right price.
Marketing professional Mark Ritson likes to present marketing using three categories: Research X Strategy X Tactics
Each category is multipliciate, meaning if you are really good at strategy and tactics but suck at research, a firm that is decent at all three will outperform your brand.
Communications fall within the 4 P’s which are within the tactic category. Let’s say marketing is 33.33 per cent research, 33.33 per cent strategy, and 33.33 per cent tactics. Now let’s say tactics can be broken up into four sub categories; price, product, place, and promotion. This means promotion, also called communications, constitutes about 8.3 per cent of marketing. How much money are you investing in communications? Is it 8.3 per cent of the marketing budget or 100 per cent? You should be investing a balance of resources to the appropriate categories of marketing.
Small business owners need to create a system where new products and services are being developed and new gaps are being filled for a profit consistently. If there is a product or service that you provide and it is indeed filling the gap, one thing is for sure: a competitor will be coming. How can a business build a moat around their brand to fend off competition?
One way is to continue to ask these questions in a systematic way:
- Where is the market?
- Where is the gap in the market?
- Can we fill that gap?
- How do we position our brand as the solution to that gap?
Having Terrible Messaging
When you clarify your message, you can take your company from good to great. Clearly defined message results in customers knowing exactly how to talk about your brand. You build a sales team when your brand is clearly defined.
This is where art and science meet. In advertising, there is a story. Narrative messaging has been proven to be one of the most effective ways to communicate to customers. Story has a framework. That’s the science bit. The art bit comes from tapping into the emotions of the readers.
There are two types of messages within an advertising campaign. An advertising campaign is a plan executed over the span of 12 months. We’re not talking about one-hit-wonder campaigns that last for a month. The first message is the emotive one. The emotional message follows the principle – “lead with the heart and the mind will follow” (Wizard of Ads, Roy H Williams). This is Daniel Kahneman’s discovery. He proposes the human species has two systems, an unconscious system and a conscious system.
Most of the time, we operate in the unconscious state of mind. The unconscious system likes emotional messages. Messages that are emotional, usually story-driven are best used when conducting long term brand campaigns. The goal here is simple – make the market think slightly more positively about your brand. In order to do this effectively, an emotional message is required.
The second type of message in a campaign is the rational message. These are short, to the point facts and information. These messages should be used for sales activation activities or short-term activities. These work great for when someone already knows about your brand and thinks slightly positively about it. Without the knowledge of brand and pre-determined feeling, these ads work less effectively. That is why you need both an emotional message for the long-term brand building and a rational message for the short term sales activation activities.
Inadequate use of distinctive assets
Distinctive assets are the things that your brand “owns” that are distinctly ‘you.’ Not distinctively different but are distinctly you. “Owns” is in quotations because you can’t actually own these things, but you can own them in the mind of the customer. Even if you have the copyright, if the customer doesn’t think you own it and believes your competitor does, that copyright matters not.
For small business owners, your distinctive assets are critical and perhaps more valuable compared to other marketing efforts. You don’t have the large budget that most of the big guns have, so you can’t out-invest these guys. In order to compete or be effective at all, your touch points with your customer require a distinctiveness asset.
Here are a couple of examples of distinctive assets:
“Like a good neighbour, State Farm is there”
“Get in the game”
Mazda “zoom – zoom”
“It’s the Midas touch”
Giorgio armani black and white commercials
Carlsberg beer green
Most interesting man alive
Tony the Tiger
How do you use distinctive assets?
Codify everything your brand touches. Make sure everything you put out there has a visible and memorable asset. You don’t have to be ridiculously creative with it. As Mark Riston explains “The first rule of brand should be, first they must know it’s me.”
On a practical level, below is a great exercise to help your business build distinctiveness. As a quick sidenote, before reviewing distinctive assets, you need to know your company’s values. What are they? Do you have them written down? Here is how to construct a practical vision for your company.
Below are some things you can do to help you identify areas where you can be more distinctive.
- List all touchpoints between your customer and your brand (digital, in-person or referral, any point a customer has contact with your brand).
- Order them sequentially.
- Enter the number of people that go from touchpoint to touchpoint.
- Rate each touchpoint on a scale from 1 to 3, 3 being the greatest, 1 being ‘needs improvement,’ based on meeting your value criteria. Ask the question: on a scale of 1 to 3, can the customer feel our values?
- Now list your distinctive assets.
- List the distinctive assets present at each touchpoint.
By conducting this exercise, you will be able to identify how many customers are walking through each touchpoint, where the drop off is, if your values are being distilled throughout your business and if you have enough distinctive assets at each touchpoint.
You can download the workbook here.