What If Apple Marketed Like a Typical Small Business?
We know that Apple is a very successful company. They’ve been around for over 30 years; their stock is doing great—with one of the highest market caps of any company (over $225B)–and they are regularly recognized as having one of the best brands in the world. Arguably, Apple’s success is due–in large part–to its marketing.
Certainly Apple’s brand has been built over the years by a huge marketing budget and some legendary commercials — including the famous “1984″ Superbowl commercial that launched the Macintosh, the “Think Different” campaign, the iconic animated silhouette iPod commercials, and the long-running “I’m a Mac, I’m a PC” campaign.
But let’s not forget that Apple started out as a small business — just a few guys in a garage making home brew computers.
What if Steve Jobs marketed Apple like a typical small business owner instead?
First off, he probably wouldn’t do any marketing at all. Many small business owners either have a “build it and they will come” mentality or they consider marketing a luxury that they can’t afford. They miss the point that marketing is the engine that generates customer activity. Marketing has two goals: 1) get more new customers and 2) get existing customers to buy more. Both pretty critical to any business, wouldn’t you say?
The second mistake Jobs might make if he marketed Apple like a typical small business might be to target a very wide customer base — instead of a niche target audience. Many small business owners are scared of leaving any money on the table, so they try to appeal to everyone — a strategy which is both extremely expensive and very difficult to pull off. From its early days, Apple targeted niche customers like creative professionals/graphic artists, the education market, and design-conscious early adopters. Obviously the campany evolved and now many of its products have mass appeal. But for over two decades, Apple prided itself on offering niche products for those who “think different.”
The third thing Apple might have done wrong if they acted like a typical small business would be to not focus upon creating a top quality brand from the start. Admittedly, Jobs made the newbie mistake of trying to design his own logo (with Ronald Wayne), but the complex, unwieldy logo was soon scrapped in favor of a simpler, more credible logo from a professional graphic designer (Rob Janoff).
Jobs also went on to hire one of the most well-regarded ad agencies at the time, Chiat/Day, to create Apple’s commercials. Instinctively, Jobs realized that the quality of the Apple brand was critical.
In essence, the brand was the product — and the product was the brand. That philosophy exists to this day — and it’s why an MP3 player or phone with the Apple logo is worth more than one without.
Thankfully for Apple’s customers, employees, and shareholders, Steve Jobs did not think like a typical small business all those years ago.
If you’d like to learn more about marketing mistakes small businesses make — and how to avoid them, grab my free e-book here.
How Much Should a Small Business Spend on Marketing – Part 3: Starting Up
In Parts One and Two of our series on understanding marketing costs, we dealt with getting a handle on the financial impact of your marketing programs and using key metrics to make sure your business does not overspend on marketing. Those first two articles were geared towards existing businesses who wanted to optimize their marketing spend.
Now we’re going to switch gears and tackle another question I hear frequently.
“I’m just getting started with my business. How much do I need to spend on marketing?”
Of course, different types of businesses have different needs. But let’s go through the top seven typical marketing projects a small busines might need to get done right from the start.
Disclaimers: Prices quoted represent a rough ballpark figure from high-quality marketing service providers in a medium-sized city. Marketing professionals in larger markets tend to charge more. Also note that these represent costs that a small business typically pays; large corporations and public companies work with national-caliber ad agencies and design firms which add a zero or two to these costs. Finally, these cost do not include printing or other production, nor do they include media costs.
Project #1: Research & Positioning
One of the first tasks you need to undertake is to understand who your customers are, what they want, who else they could do business with (besides you), and how you are going to differentiate your company from the competition (i.e. “Brand Position” or Unique Selling Proposition). A marketing consultant might charge $5K-$10K for this.
Project #2: Brand ID Package
Next you need to translate your Brand Position into something tangible. A Brand ID package would include naming, logo design, signage, brand colors, business cards/stationery templates, invoices, forms, and some consulting about how your store or office should look. Cost: $5K-$10K. Yes, I know you can go online and find someone who will knock out a logo for you for a couple of hundred bucks or less – but these logos will be generic and not represent your brand position. They are just not worth it.
Project #3: Marketing Blueprint
You can call this a “Marketing Plan” if you prefer, but I find that a action-oriented Marketing Blueprint is much more useful than a 40 page document that gets stuffed in a drawer some place. The Marketing Blueprint has three main sections: Strategy, Tactics, and Measurement — and outlines pretty much what marketing activities you’ll focus on for the next year. Cost: $2.5K-$4K.
Project #4: Basic Print Collateral Package
Your business may need a brochure, folder, product info sheets, staff photos, store photos, yard signs, door hangers, or other basic print collateral. If you decide to invest in a Yellow Pages ad, throw that in the mix as well. Cost: $3K-$10K.
Project #5: Website: Design/Writing/Coding
A basic SEO-optimized site, either hand-coded or (better yet) built on the WordPress platform should run you between $5K-$10K. Note that this is for an informational, lead generating website — not a heavy-duty e-commerce or other database intensive site.
Project #6: Social Media Start-up & Training
The Holy Trinity of Social Media is Facebook, Twitter, and your Blog. If you are not adept at these tools, hire someone to set you up, build customized pages and graphics, outline a 90 day content plan, and train you or someone on your team to use social media to build better customer relationships and get leads. Cost: $5K-$7.5K.
Project #7: Video Package
In case you haven’t noticed, video is taking over the Internet. YouTube is now the #2 most widely used search engine — and the number of online video viewers grew over 10% YOY to 141 million unique viewers in February 2010 (according to Nielsen). This means that nearly every business could benefit from a package of short videos that allows potential customers to learn about you and why you are great — from the comfort of their own laptop. Cost: $10K-$20K.
So there we go. Seven fundamental marketing projects to get a brand new business off the ground.
Did I miss anything? Leeave a comment below.
How Much Should a Small Business Spend on Marketing – Part 2
In our last post, we discussed the concept of using key metrics to make sure your business does not overspend on marketing.
As an example, we calculated the profit per customer for a hypothetical kitchen remodeling business at $2,000 and decided we could spend some amount less than $2,000 to acquire that customer. But how much less? The answer to that depends on your tolerance for risk.
Let’s play with a spreadsheet and a hypothetical magazine ad for our business.
A local magazine targets homeowners and they charge $1,850 for a magazine ad that reaches 117,000 people. Some tiny percentage of those people might become leads by calling us or visiting our website — and then some small percentage of those leads might take action and become a customer.
After we run the ad and carefully track leads and customers, we fill out a spreadsheet like the one above. We see that 1/4 of a percent of the magazine’s readers (293 people) expressed interest in our kitchen remodeling service by calling, visiting our website, or stopping by the showroom. We can then calculate our cost/lead (the cost of the ad divided by the number of leads).
Let’s further assume that out of those 293 leads, we got three new customers. In essence, for our $1,850 investment in the magazine ad, we got three new customers (at a cost of $632.48 per customer). Note that the numbers above are both hypothetical and rounded.
On the surface, that seems like a decent deal. We pay $632 for a customer that’s worth $2,000. That leaves us a profit of $1368.
But…
There is a certain amount of risk that arises from this magazine — in the form of variable factors that could cut our results significantly from month to month. Maybe the magazine has a bad cover one month and its retail sales tank. Those 117K readers turn into 85K. Maybe our ad placement in the magazine isn’t that great. Or the article next to our ad depresses people. Maybe the stock market drops and fewer people can afford a kitchen remodel.
Is $632 too much? It depends on how risky you think your particular marketing program is. If you’ve advertised in this particular magazine for 6 months and your cost/customer never varies all that much, it’s probably not very risky to continue.
Personally, I prefer cost/customer amounts in the range of 10%-20% of profit. This provides more of a safety net just in case the program doesn’t perform as expected. So in our kitchen remodeling example, I’d try to find marketing programs that worked out to a $200-$400 cost/customer or less.
Just for fun, let’s try to run a Google AdWords (pay-per-click) search marketing campaign. We’ll make it simple and say that we buy the search term “seattle kitchen remodel” (since our hypothetical company does business in Seattle). As I write this, Google estimates that the cost per click (CPC) for that search term is $2.28. Let’s keep the same ad spend ($1,850) which translates to 811 clicks to our website (leads).
Now, everyone who clicks through to our website is a targeted lead. After all, they were searching for “seattle kitchen remodel.” But there’s always a certain amount of competition on Google, so let’s say our conversion rate from lead to customer is 3/4 of a percent (0.75%). That works out to six customers at a cost/customer of $304 — which is more in my comfort zone.
Professional marketers spend much of their time testing marketing programs — and now you see why. The goal is always to reduce cost/customer (customer acquisition cost), but maintain or grow the volume of new customers — and do this all in a reliable, predictable way day after day. This isn’t easy for a number of reasons (including imperfect tracking of customer source, for instance), but it is the only way you can avoid overspending on marketing.
In Part 3 of this series, we’re going to discuss start-up marketing costs. Stay tuned.
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