Obvious but Hard Lessons in Small Business Advertising

small business advertisingThere are two kinds of small businesses:

1)  Those with a very specific niche, but a nation-wide target market (e.g. taxidermy services for exotic animals).

2)  Those with a broad enough scope, but a geographically limited market (e.g. an upscale bistro).

As someone who has marketed businesses in each of these categories, the lessons in this piece apply far better to the latter category then the former.

1.  Limit Advertising Efforts Geographically

No matter how tempting it is to include a few extra zip codes when sending out flyers or to increase the geographic radius of a Google Adwords campaign, to me it’s never been a wise idea. Whenever designing an advertising campaign, as a small business owner, I have to constantly remind myself the real reason I am advertising is to maximize revenue and not to maximize reach.

It is far easier to maximize revenue by targeting the same 4,000 to 5,000 households in my neighborhood on a monthly basis then blowing an entire year’s advertising budget by sending out flyers to nearly 200,000 households in my hometown. One approach I like to take is as follows:

  1. Establish a target revenue goal.
  2. Assuming 1% follow-through on my advertising efforts and average invoice value, establish the number of households I need to reach.
  3. Using Canada Posts’ Precision Targeter Tool, figure out the radius which has enough households to reach the goals set in step 1.
  4. Reduce the radius by 50% and send-out the flyers twice a month instead of once a month.

This approach has historically yielded as much as a 40% increase in the number people who responded to my advertising.

2.  Network With Other Small Businesses

For every 5,000 households in a neighborhood, there are 50 to 100 small businesses which cater to them. It’s a lot easier to touch base with the 50 to 100 small business owners & managers twice a quarter then trying to reach 5,000 to 10,000 households.

If anyone can understand your troubles and appreciate the hard work that goes into being a small business; it is another small business owner. The idea is not just to get the owner to give you business; but to get them to give out your referrals to his/her existing client base.

The referring business already has a trusted relationship with the customer. When that customer gets referred to you, almost all the goodwill and trust is already established and little effort is needed to win over the customer. Think of each small business in your neighborhood as a single node and each node has already made the effort of attracting the customers. Now all they have to do is make quick and non-aggressive referrals and some of those customers will get passed on to you.

One of the more successful campaigns I ran from my auto-shop was with a local gym. For every oil change, the customer received a no obligation 30 day trial (instead of the regular 15 day trial). However, do not expect more than 2 to 3 referrals per quarter from any small business.

3.  Measure All Advertising Efforts

The thing about marketing and advertising is that you can blow 100% of your budget and have no idea how effective it was. Therefore, it is imperative that all advertising efforts are measured. Online advertising is easy enough to measure as long as an analytics package is installed on the website. There are a number of free analytics packages including Google Analytics; although my personal preference is for Clicky Analytics, given its ease of use and heatmaps.

For offline advertising, when possible, have coupons, flyers and all advertising material printed with unique codes. If you are dropping business cards or coupons in 5 different local shops, then have a unique identifier on each of the 5 sets. This will tell you two critical things:

1) Which type of local businesses are most affective at getting you new customers.

2) Helps you narrow down your ideal target market.

Always have expiration dates on all your special offers and coupons. Not because you may be unwilling to gain a new customer with a coupon, but rather to tie in when the advertising for the special was done and how many customers responded to that advertising.

4.  It’s Easier to Retain Customers Then Get New Ones

Advertising is far more effective when you reach existing customers rather then trying to draw in new ones. This may not sound like much, but it could be one of the most powerful insights during “slow” periods. You already have all the insights for your existing customers (e.g. their age, interests, how receptive they are to your product). Best of all, you can advertise to your existing customers with next to zero cost by simply reaching them over the phone.

When you send out coupons to your existing customers, even if they don’t need it, they will likely pass them along to friends and family. This principle is especially true, if you have ever advertised on Facebook, where “sponsored stories” have a 5 to 10 times higher click through rate (i.e. the number of people that click on your add) compared to an old fashioned add.

5.  Don’t Market or Advertise to Friends and Family

One of the lessons I really wish I had learned in a classroom was to never advertise or sell your product to friends and family. For two reasons:

1) Friends and family meet you for a number of reasons but none of them include soliciting your business to them. Essentially, when you start making your interactions with friends and family about your business, you have taken away any reason for them to meet you.

2) No matter how big your circle of friends and family is, it is always very limited. So why spend this time and effort on such a small subset, when you could be meeting and greeting an entire neighborhood of 4000+ households at your business sponsored summer BBQ?

Easy Way Hard Way Photo via Shutterstock

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Saad Ahmed Saad is a successful serial entrepreneur, with business ventures including an outdoor power equipment import & sales business, a custom cable manufacturing company, CustomCable.ca, and most recently, a Franchise location, Mister Transmission.

8 Reactions
  1. #4 is huge. Providing great service to existing customers not only helps you retain those customers, but they then become your evangelists. They send their friends, family and neighbors to you. If you get a bad reputation in your geography, you may never recover from it.

  2. Great list of tips. #4 and #5 are big ones. I’ve learned over time that it’s definitely easier to get repeat business and alienating friends and family is one of worst way to go when trying to get new business. Thanks for sharing.


  3. Absolutely great post. A lot of businesses think casting their nets wide is the answer when targeting your advertising yields better results. And the part about not marketing to family or friends…how many entrepreneurs have worn out their welcome with that tactic.

  4. Thanks for this local-focused post, Saad.

    Even though flyers and such are considered a bit, “old,” they work, if used correctly.

    I remember when my brother-in-law opened up a local restaurant and used them the right way.

    They work.

    The Franchise King®

  5. Excellent, well thought out article. As a media buyer that provides advertising services to small businesses nationwide, we see a lot of customers that can use this information. It’s always wise to keep reaching out to new customers, but just as item number 4 on your list states, maintaining your current customer base is crucial. Keep them happy and serve them well. Referral business from them will help build your customer base even further!

  6. I like # 1, it has always worked for my past business, repetition works.

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