Newspaper ad revenue vs Facebook ad revenue

This graph comparing Facebook ad revenue vs newspaper ad revenue appeared over the Thanksgiving weekend.

As a small business owner, here are a few things to factor into your reaction to this data:

1) Graphs like this can be misleading when there is one media (Facebook) in serious growth mode vs. an entire market. We’re talking about a large market of diverse sized newspaper businesses where many of this group still don’t get the internet, still don’t get direct marketing, don’t have the ability to target subscribers based on income and other demographics (much less psychographics), and still don’t coach their advertisers to place ads that produce results. There are some who do get those things and who are focused on producing results for their clients (versus “How many $ of ads can we sell this week?”), but they seem to be a minority. Be careful not to paint the entire newspaper industry as a monolithic dinosaur that cannot deliver solid leads to you. Some papers fit that description, and some don’t.

2) The volume of Facebook ad revenue vs. U.S. newspaper ad revenue as a whole doesn’t mean you much to you IF your newspaper ads are working. Remember, what works FOR YOU is what matters, not what a pundit says, and not what the average says about an entire market across the whole country. Do what works. Do what you can dominate at. Monitor constantly. Keep in mind that a substantial piece of the drop in newspaper ad spend is due to classifieds going to online markets such as Craigslist.

3) If you aren’t already using Facebook ads, perhaps it is time to reconsider them – no matter how solid the results are from your newspaper campaigns. Wearing blinders is dangerous, so don’t get caught napping because your current newspaper ads are producing well.  Like every lead source you use, you have to watch your newspaper ad production closely to make sure that it’s still hitting your cost per lead requirements. If newspaper lead performance falls off, you’ll need to keep a close eye on the customer value of those leads.

4) The graph is a little old because some of it appears to be based on 2014 newspaper data. The advance of Facebook ad spend has likely increased since that time. An April 2016 eMarketer piece indicated Facebook was on track for $22B in global ad sales for 2016. See #3.

Pricing custom work well is a strategic advantage

How good is your business at pricing custom work?

If you don’t have a way of pricing custom work that consistently accounts for your costs and labor, how do you know if you’re making any profit on these deals? How would it feel to find that you’re losing money on half your custom work?

Do you have a spreadsheet or software program to help? If not, do you have some other formulaic means of pricing work?

If you read the May 12 New York Times “You’re The Boss” piece by the owner of Paul Downs Cabinetmakers, you’ll learn that these guys are fortunate enough to have a formulaic method to determine the price of a custom item.

That they have this formula puts them ahead of most businesses that do custom work. However, the trouble starts when they discuss what’s going on behind the scenes as there are a number of things going on that conspire to cause problems when reality and the pricing formula meet on the shop floor.

The failure points

Downs mentions that the spreadsheet’s material prices haven’t been updated in over 6 years, that material use and overages are not tracked, that tool use and labor methods have changed and that the info in the spreadsheet is sometimes entered wrong and fails to match the reality of the work actually being done.

As you read about all the possible failure points of this spreadsheet and how they’ve allowed it to become outdated and stale compared to their business reality, you can’t help but wonder how they got to that point.

Here’s the thing… this type of situation is pretty common.

Our tendency to think we’re too busy to address these critical, but tiny (at the time) maintenance issues has a way of giving us permission to postpone giving them attention. We think we’ll take care of them someday since some other thing seems more important right now.

It doesn’t seem to work that way, despite the best of intentions.

What usually happens is that the business lets these little things get out of sync an hour at a time, a day at a time, a week at a time and so on until we find that our internal systems look like they were designed to run some other business (or none at all).

At some point, things will have crept so far out of line that you’ll have no choice (like Downs) but to address them. Not only has the job you face become massive, your strategic advantage of having accurate, formula-driven custom pricing will have become the exact opposite.

Why does it matter?

The trouble with getting your business into this situation is that it severely damages your ability to see trends, know if you have enough (or too much) raw material or labor to deliver upon your work commitments.

If you’re already stuck, you have to consider the cost of continuing with a broken pricing model, assuming you have one.

If you aren’t sure you’re turning a profit on custom work – the showpiece work of your business – this merits immediate attention.

This is your best work. It’s the work that generates the reputation that earns your bread and butter work. It’s the work that you use to get your best, most profitable clients.

And yet you aren’t sure exactly how much profit you make on it?

If a close friend was in that situation, you know how you’d react. You’d go out of your way to make the situation clear to them, helping them if possible.

Why not do the same for yourself?

Should this take six months?

No, it shouldn’t. While Downs says his expert worked on this for six months, I suspect what he really means is that it took six months from start to finish – not that his expert worked on it eight hours a day, five days a week for six months.

The important thing to remember is that this doesn’t have to be perfect the first time.

Start with the highest impact item you can wrap your head around. and implement it. Tweak and add pricing components one at a time to improve accuracy.

This allows you to see results and adjust for accuracy and additional information without allowing any single change to be so complex that you have no way to assess its worth, much less its accuracy.

Get to work!

Where does new business hide?

In every town, there’s a place where new business hides.

If you can’t find its hiding place, your business is likely to struggle.

Most of the time, that struggle is rooted in the inability to dependably produce predictable, month to month revenue.

Without predictable month to month revenue, businesses close, scale down or at the least, fail to reach their potential to support their owner, their family, their employees’ families and their community.

Revenue consistency problems influence a business owner’s decision making because their decisions end up being driven by cash flow. Decisions based on sales you made last week (much less yesterday) rarely fit into a long-term strategic plan.

Predicting revenue isn’t all that difficult. You simply have to check the Sales Thermometer.

What’s a Sales Thermometer?

Imagine that there’s a thermometer on the front door of businesses and homes that told you to pull in and sell something to someone because they had developed a need or a want that *had* to be fulfilled.

Armed with a town full of sales thermometers, you’d have all the new business you’ve ever wanted and wouldn’t waste a bit of time chasing around town after people who didn’t want or need what you sell.

Instead, you’d simply drive through town, check the thermometer and stop at the places where the temperature was the highest.

On days when you need a little extra revenue, you might get up a little earlier and drive around a little later so you could check more thermometers. 

Once you took care of the places with the hottest temperatures, you could retrace your steps, scan for the next highest set of temperatures and take care of those sales.

As the sales thermometer readings change on other homes and businesses, you’d see them during your travels so you could pick up on the newest opportunities for new business – simply by being observant.

Scaling

There is a downside to this sales thermometer thing. It has some scalability issues.

For example, you can only drive so far in a day and every customer who takes an hour of your time consumes an hour that you can’t use to check other thermometers. That will eventually force you (subconsciously at least) to stop and work with only the hottest thermometers.

If only there was a way to automatically check the hottest thermometers without spending all that time driving around.

Fortunately, there is.

Getting new business isn’t a joke

While talk of a sales thermometer seems like a bit of a fantasy or even a joke, your business’ inability to consistently produce new business from existing and new clients is no joke at all.

If your business struggles with that, the problem isn’t the lack of a thermometer. The problem is that you aren’t reading it. 

The sales thermometer in the information you should already have about your clients and prospects.  The thermometer’s temperature is driven by behavior and interaction, both yours and that of your prospects and clients.

Those behaviors are like a patient’s symptoms. Monitoring  and acting on them in a predictable, repeatable, systematic way is what gets your business to the point where you *can* produce consistent, predictable month to month revenue.

Random revenue from new business is an indication that you’re not watching and acting on these symptoms on a consistent basis. We all know we need to do these things, but sometimes we get sidetracked by the crisis-of-the-day.

While they should be acted on individually for each prospect or client, these symptoms should also be grouped together (aggregated) to help you monitor the health of your business and your market.

Things that drive up temperatures

What causes rising temperatures?

  • Interaction behavior changes.  You should know when someone is paying more attention than a typical prospect. Do you have a way to detect this?
  • Sales cycle behavior changes. You know how long it takes to close a sale. Is that timeline changing? Are certain prospects skipping steps in the process? Is their path-to-purchase pace is faster than normal? If so, does your internal behavior toward those prospects change to suit their timeline?
  • Purchasing behavior changes. For example, customers who are buying more (or less) often than they normally do. Even if you’re tracking sales on paper, you can monitor this .

Are you monitoring the sales thermometer?

What are your customers doing online?

I mentioned the Meeker internet / technology trends report last week on Facebook, but I thought I should summarize a few important nuggets from it for small businesses, particularly small software businesses.

  • 30 percent growth in mobile users in the last year.
  • 50% growth in bandwidth use by mobile devices. Specifically, 15% of all internet bandwidth use is mobile, up from 10% last year.
  • Tablet use continues to expand quickly. Apple sold more iPads (140k) than iPhones (60k) last year.
  • More tablets shipped in the last quarter of 2012 than desktops, despite being on the market only 3 years.
  • Photo sharing is on pace to double since last year. Last year, about 375MM photos were shared per day. This year, users have already shared more than 500MM photos per day on average.
  • Wearable device usage is doubling every month so far this year.
  • More people access the internet via mobile device in China than via desktop – in a population of over 560 million internet users.
  • 45% of Groupon transactions are now online. 2 years ago that number was 15%.

I recommend you check out the whole slideshow, even if you aren’t in the technology business. This stuff affects almost everyone in almost every business.

How to give MORE refunds and love doing it

sales

Last time, we discussed steps you could take to reduce the number of refunds or “lost” sales you have.

The idea is that every refund or lost sale costs you money, but if you think about this in the big picture, it’s entirely possible that you want to give MORE refunds.

And of course, I have a story about that, because I used to be pretty proud of the fact that I could count annual refunds on one hand.

A conversation with Dan Kennedy changed all that. He suggested that if we had so few refunds that it was the subject of bragging rights, we weren’t marketing or selling hard enough. Otherwise, we should have more refunds – and the payoff for that would be far greater sales.

He was right.

We didn’t have to get pushy and do the hard sell thing, we simply had to step beyond a strategy of selecting just the right people to attract to our business and turning a crazy high percentage of them into customers.

When we widened our qualifying process just a little – not a lot – it was transformational. We adjusted until we found the sweet spot – and it paid off.

Yes, we definitely had more refunds, maybe two or three times as many – but that was still only 10-15 per year. It also resulted in substantially more sales, so it’s worth a try. Just don’t use this strategy as “permission” to use every living being as your almost-perfect prospect.

Remember Jeffrey Gitomer’s “People hate to be sold but they love to buy.” There’s a lot of meaning in that which goes way beyond turning off the hard sell.

What Godzilla does before buying a car

In part two of the growth series, we arrived a place where we figured out that the buying signals customers (and prospects) send us are sometimes subtle, if not almost invisible.

One good example is the sometimes joyous, sometimes annoying as all get out process of buying a car.

Q: How does the salesperson know when their prospect has gotten past the point of no return when buying a car?
A: They take a test drive.

Every car salesperson knows this. They even have a litany of little sayings to remind themselves of it, like “The feel of the wheel seals the deal.” And that’s Ok, because that is one of the indicators they have to pay close attention to if they want to help their customer.

Remember, we don’t (mostly) visit car dealerships for our entertainment. We’re there to buy a car or at least, decide which one to buy. Their job is to make that process as frictionless as possible. In order to do that, they have to know customer behaviors.

The test drive is a great behavioral signal that you’ve moved beyond the financial questions and which model to get and so on. It isn’t some sales trick to “close more deals”, though I’m sure it has been used that way. It’s about knowing what your customers want and helping them get it.

Do you offer a test drive?

While a test drive’s value might be lower for other purchases (software, books, videos), it still might be worthwhile indicator. Do you offer your prospects and customers the ability to test drive what you sell? Even Amazon does this with their “Look Inside” feature. Software businesses have done this for decades.

Remember, the point isn’t the test drive itself, it’s the behavior that tells you “I’m ready!” In clinical terms, you might say “Behavior A is strongly indicative of a desired customer action”, but please don’t talk or write like that.

Depending on the behavior, “I’m ready” might say “I will be one of your best customers” or “I’m ready to move up to the next tier.”

That’s why you might look at purchase intervals in your sales data, at what your best customers buy that few others buy, and so on. A pattern of behavior will show itself eventually.

For example, if you look at your QuickBooks sales records and see that your best customers all bought within 30 days of being added to QB (what triggers them being added to QB for you?) and all your “worst” customers (bought the least amount, least often, whatever it is for you) average 90 days between whatever made you add them the QB and their first purchase….then the next person who buys within 30 days is…giving you (based on performance of everyone) an indicator that they might be one of those good customers.

As such, you might add them to a different email list. Maybe it’s the one that emails them weekly instead of monthly, talking about more sophisticated topics than your monthly emails.

In some ways, it’s not any different than looking for patterns in behavior in Olympic swimming, NASCAR or fantasy football. If you’re into those things, you know what winning behaviors are.

Why wouldn’t you also know what behaviors your best customers have? Not only does it help you figure out who the next one might be (sometimes long before they become one), in certain markets, it might also let you help others improve what they do.

Where the wild things are

Sometimes behavior is about location. Do you know where do your best customers come from?

Do they live in zip 59912? Do they call from area code 312? Do they find you because of an ad in a certain newspaper or magazine? Do they come to you from Facebook? Ever made a sale to someone who liked your business page on Facebook?

An ideal answer might be “We have 114 customers who live/work in 59912. Overall, 20% of our customers come to us ads in the NY Times Sunday Edition and 80% initially come to us from Facebook”.

Invest some time to find out where your customers come from and what behavior your best customers exhibit. Both are keys to growth if you take action on what you learn.

Habits and Heatmaps

Here’s your sign.

While it is a well-known “redneck” comedian punch line, it’s also something you should be looking for.

Some signs you must seek out, while others have been right in front of you all year long.

Many of those signs are buried in your existing business data.

Habits

Your business data illustrates your customers’ behavior, including buying and service calls. Some companies use it, some don’t.

For example, I realized today that I hadn’t sent out thank yous to a few clients. It’s been a very hectic, deadline-filled November and December and this is something I usually do right after Thanksgiving.

Not this year. And no, it wasn’t on my calendar because it’s just ingrained behavior. Bad Mark. Bad, Bad, Bad.

When I do remember this (and now, when it pops up on my calendar), I use high-end vendors to ship items like fresh or smoked salmon to a short list of folks that I do business with year-in and year-out.

One of the reasons I forgot? I didn’t get a catalog from either of the two vendors that I usually use. Well, sort of. I got a catalog two months ago, but that isn’t prime ordering season for “corporate gifts”.

The problem with this is that these businesses know when I order. If they look at the data from prior orders, they could *predict* when I place an order and what I might buy, much less where I’d send it.

Predictable Male Behavior

If I bought a two pound smoked salmon for the last five years, they know this because the ship to isn’t my name or address (not to mention the “It’s a gift” checkbox on the order form).

Given typical male shopping predictability (“get in, get out, move on”), they could have won the order by simply dropping a card in the mail or sending me an email saying “Hey Mark, we appreciate that you’ve ordered our delicious smoked salmon as a gift for the last five years, would you like us to send Joe another two pounds or would you prefer something different but in the same price range, such as our crab sampler?”

Or something like that. How tough would that be? No cold call. No catalog. Just an email from data that already tells them how I behave.

Do you want to do this for everyone? Probably not, but it would be of use in concept at the very least. Look at your order/sales data. Not just across the board, but for your best customers, however you define that. When do they buy? Might be a good time to place a reminder in front of them.

Look for the heat

Have you ever looked at a heat map?

On a heat map, the “hotter” looking places are either the locations where most people click or they indicate where eye-tracking tools determined that people are looking most of the time when they view a page.

Below, you can see an example website heat map illustrating click locations.

The red places indicate locations where the most people clicked.

The yellow and green areas are slightly less popular click locations and the blue are even less frequently clicked.

In other words, red is hot, yellow is warm, green is cool, blue is cold – just like on a graphical heat display – only this one shows the locations where people click on this web page.

 

Videos also do a nice job of illustrating data on a heat map, like this click location map.

This video shows a heat map eye movement on a video advertisement and the results aren’t what you might assume from seeing the still preview image.

Stir

Like any other measurement device, tools like the heat map help you understand if your site is well-designed for your user community (they are not alike from niche to niche) and can indicate usability issues, copywriting problems (and wins) and design strengths and weaknesses.

Your sales/order data is full of behavioral information.

People tend to be visual learners. What if we stirred these two together?

What would you learn if you looked at your calendar overlaid with a heat map based on your lead, sales, order and service data?

Checkmate on the Fridge

My favorite story about setting expectations comes from a really smart real estate agent.

When you decide to buy or sell a house with her, she gives you a pre-printed list of all the things that can happen during the process of buying or selling.

A list of 20 or 30 things that could delay the sale or otherwise go wrong might seem like a bad thing to give to a customer, but it works for her.

She explains that the list contains the most common roadblocks encountered during a transaction and assures the customer that she knows how to handle all of them.

If and when they occur, she’ll call and say “Number 16 on your list just happened, and I’ll take care of it.”

Works for me

How does this work for her?

First off – it shows the buyer/seller that she is experienced and is prepared for the little things that come along and try to derail a transaction. By discussing them in advance, she sets expectations, establishes her expertise (again, by warning you about these things in advance and telling you she has your back) and leaves you far more confident about things.

If trouble occurs, the sheet (which also acts as a timeline) shows that she predicted that it could occur and handled it for you vs. the appearance that this could be a surprise.

Once the transaction is done, the list serves as a reminder of all the things that *could* have gone wrong but didn’t. The list also reminds you of the value she delivered by taking care of all those things.

She could have simply provided a generic FAQ list and made the client sign it (likely without reading it) and handle it like other agents handle these things.

Instead, she leverages it into an advantage that – among other things – demonstrates why the client should value her services.

Learn, unlearn, relearn.

Chameleon's eye
Creative Commons License photo credit: kaibara87

“The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn.” â?? Alvin Toffler

Are you doing the same things in the same ways that you did when *everything* worked?

If so, is that still working for you? If it is, great.

If it isn’t, you can be stubborn and wait out the marketplace to see if things come back to those Business-Can-Do-No-Wrong days of the “mid-noughts”.

You could also be stubborn and blame the whole thing on your state government and/or Washington. If you do, I’ve no doubt that you also gave them full credit for the unbridled business growth you had in 2005-2007.

Or, you could take things into your own hands to the extent that you can.

In Your Hands

For example, if you run a medical facility like an eye clinic or a dental office whose lower tier/checkup services are paid for via insurance and you have patients whose records indicate their services are insured, do you send them a reminder postcard on the anniversary of their last insured service?

I’ll bet many of you do. The postcard probably says something like “Your annual appointment is due. Call us.”

How’s the response to that postcard?

If it isn’t so hot, have you tried different cards to different people?

Don’t feel bad if you do. Learn, unlearn, relearn – remember?

Message to market match

If you send different cards to different demographic groups (such as single, male, female, married, older, younger, etc), you’re doing what direct marketers call “message to market match”.

Direct marketing folks gave it a name for a reason – it’s substantially more effective than “mail everyone on the planet the exact same postcard”.

That means that your message to a particular group of people is customized for them. Their needs. Their wants. Their view of the world, generally speaking.

Do you send the same card to single men, single women, married couples in their 30s, retired couples, “middle aged” couples with kids, single moms, etc?

A single man might see a “Time for your annual appointment” card with a couple of kids and a dog on it and just pitch it.

Likewise, a married couple in their thirties might see a card with a white-haired couple on it and do the same.

Return on Investment

You might wonder if this is worth the effort.

Here’s how you can test it without spending a ton of money.

Go back and look at last month’s (or last quarter’s) postcard mailings. I’m assuming you can figure out who you mailed since you mailed them in the first place.

The next time you mail that group of people, send half of the female clients a postcard that is designed for a woman.

You can decide what that means in your market, but I don’t mean “Just make it pink with flowers.”

Send the other half of the women your standard card.

Measure the performance of each card.

Over time, continue to do any of those things that produce a better response than what you were used to. As response and ROI improves, keep testing two versions of your cards and see how they work.

The one that’s currently producing the best results is called the “control”.  Keep trying to beat it.

This strategy can be applied to your phone scripts, your emails, your Facebook page, your tweets on Twitter, your Yellow Pages ad, your newspaper / radio / TV ads and so on.

Insurance-paid services aren’t a requirement to do this sort of thing. I’ve yet to see a business that can’t benefit from this and do so without being annoying to their clientele.

Make it happen

I don’t remember who originally said this, but someone once said “There are three kinds of people: Those who make things happen, those who watch things happen and those who wonder what happened.”

Relearning how to make the phone ring is no one’s responsibility but yours. I think that’s a good thing.

Be the one who makes things happen. It has a way of keeping you from being the one who wonders what happened.

A gift for Bobby?

Yesterday, I was reading a comment from Bobby Rich about this small business (whaaaaa?) post on Hildy’s blog.

Bobby took Hildy’s idea, smooshed it around a little and decided to see if it would work for his business.

I like the idea, but I think we can put a cherry on top of that smooshed idea.

No doubt, it’s a nice giveback to the community to promote these local businesses.

In partnership with the local Chamber of Commerce, regional marketing co-op, etc; it might also be a way to promote that group and its members, introduce new members’ businesses, and maybe urge new businesses to join that group.

Even better for Bobby, I’m thinking it’d be a simple way to demonstrate to a small business owner how well radio/tv ads for that business would work on his stations, particularly the small local businesses who might not even consider advertising on radio/tv.

Imagine the reaction of a small business owner who previously balked at the investment of a radio ad, only to find that a free ad ended up generating 100 new customers in a few week’s time – especially if the ad was designed to make the results obvious and trackable to the ad.

Kinda makes a guy wonder…