On our recent “Ask The Expert” call, I have noticed that small business owners usually have two major hurdles to overcome to become effective marketers. So what are they? Defining your niche, “Jack of all social media outlets, master of none”; and customer lifetime value. These may seem obvious, but you may be struggling with a few of these yourself without realizing.
So what happens if you don’t define your niche? Well first you start to sound like the big brand competitors, and that will hurt you in the short and long run. For example, if you are selling crackers and don’t define this niche why should a customer buy from you instead of Ritz crackers? By defining your niche, even though you are narrowing the population that will buy from you, you can differentiate yourself between you and other brands out there. So let’s say now that you define your niche as gourmet crackers. Well, wont only certain people buy it? Yes, but this, in the long run, will save you more money and time because this way you will not be spending money to advertise to people who can’t/won’t buy your product and the time will be used more wisely to bring in clients that will have a long lifetime value.
Thinking that since there are so many different media outlets, that you have to be on every one to get your name out. In essence, it’s true in today’s age you need to be running campaigns on Facebook, Twitter, Instagram, Snapchat, etc. to reach your target audience, but as a small business owner especially if you don’t have anyone to run your social media outlets. You are better off picking one that closely matches your demographics and mastering that one until you can hire someone. It can be overwhelming, but if you take your target audience and match it to the social media outlets that they are most likely to be on, this not only will reduce your stress but also help you obtain the right clientele and spend your marketing dollars wisely.
Small business owners sometimes have trouble looking at the long term when it comes to spending money to acquire a customer. You have to spend money to make money right? Commonly we hear it is expensive for me (business owner) to give out these samples or do these marketing campaigns. But your competitors are spending money, and you need to get your brand out there.
So let’s look at Starbucks, Starbucks has been reported to spend about $1,400 to acquire a customer. Their customers on average will spend about $704.95 per year. So it takes Starbucks about two years to break even, but Starbucks customers stay on average with the big chain for 20 years! So their customer lifetime value is a whopping $14,099 a total profit of $12,699. Of course, Starbucks most likely wasn’t spending that much money when they started up to acquire customers, and as a small business we don’t expect you to spend that much on a customer either, but this gives you the insight to see that yes you are spending the money now and yes it might be expensive, but in the long run you will be able to not only break-even but make profit! So what is your total acquisition per customer? And what is your customer lifetime value? As a startup it is hard to calculate the latter since you don’t have all of the data, but as you grow the statistics will be there.