3 ways to avoid marketing and budget pitfalls

Ineffective marketing and a poor internet presence are among the top six reasons why 75% of new businesses fail over the long term, according to a study by the US Bureau of Labor Statistics. Meanwhile, in a survey of 1,000 marketers worldwide conducted by Rakuten Marketing, respondents estimated that they waste an average of 26% of their budget on poor channel and strategy decisions. One Final Stat to Consider: Over the Year, Businesses Have Gone Tighter: Gartner’s The state of 2021 marketing budgets report (based in part on a survey of 430 CMOs of large companies in North America and Europe) found that marketing spend as a percentage of revenue had fallen almost half in 2021, from 11% to 6.4%.

To improve efficiency even in this cost-cutting environment, companies don’t always need to conduct extensive research, abandon established channels, or restructure marketing departments. At Refocus, we’ve discovered three ways to cut costs and stay marketing efficient.

1. Take the time to find out why customers “praise” your product

Some entrepreneurs and marketers mistakenly believe that Facebook and Google are fabulous fairies that can help launch a product easily and quickly across other countries. In fact, it is not. Marketing is a science that carefully studies the lives and needs of customers, and it’s not just about determining a target audience based on where they live, interests, and financial status.

Before launching an advertising campaign, it is essential to engage in in-depth interviews. This will help save thousands, if not millions of dollars on inefficient activities.

Related: 5 Strategies to Make the Most of a Customer Testimonial

When my company launched our marketing course in another country, we thought we had three target audience segments: senior marketers, junior marketers, and entrepreneurs. In the end, we found that although we spent money advertising to all three, only one needed the product.
After the first ad campaign, we determined that attracting a customer was five times more expensive than expected, so we started doing what any marketing team would suggest: A/B testing the landing pages, as well only modified creations and experiments with the channels. After this effort, we only saw a 30% reduction in prospecting costs, were not satisfied with these results and decided to go further, including inviting customers to help us. We took twelve people from each segment and started asking them questions using the task-to-do methodology (JTBD). The idea of ​​the concept is that different users buy the same product for different purposes — or as we say in JTBD terminology, a product is “rented”.

Take the example of an iPhone: the first buyer rents it to demonstrate its status. The second needs his camera to take high quality photos, while the third just wants a portable gadget to stay connected with his family. Everyone uses the same product for their own purposes, and the same goes for any business, whether it’s a banking app, a restaurant, or a clothing store. JTBD methods help determine the needs that people satisfy by paying for a particular product or service.

Related: 3 low-cost sales tools for startups

The methodology of the work to be done exceeded all our expectations by revealing that two of the three segments tested did not suit us. For example, young marketers had no problem finding jobs because big companies chased them away right after graduation. Experienced marketers needed specific product instruction ads in local channels, typically applicable only to their country. Our goal, however, was to create an MVP, so we didn’t really want to get into product customization. As a result, we were left with just one segment: we focused on entrepreneurs, who needed to learn marketing during the pandemic in order to get their businesses online. We created a new website based on this information and also decided to get feedback from a potential audience before launching traffic. In the end, we collected more than 300 user comments regarding colors, fonts and other structures, and we took them all into account.

2. Find your price conversion balance

Have you ever hesitated to launch a new product because you thought its price was too high? Or, conversely, perhaps you felt uncomfortable selling your original idea at a low price, but the target audience, in your opinion, was not ready to pay more? There is only one way to know either answer for sure: to test the proposition. First, do market research to understand what customers are looking for and what competitors are offering, and at what price. This will generate an awareness of the variety of prices and products offered, and your place.

Second, ask what result you want to achieve. For example, when launching a new product, some entrepreneurs set a low price in order to build up market share. Others prefer to inflate costs to attract customers who can afford to pay for an exclusive product.

Here’s how we tested course prices at Refocus: In one of the locations, we sold our course for $400 and spent $150 to attract each customer, then improved the content and increased the price to $1,000, with $100 more spent per acquisition. We continued the experiment and it turned out that the most optimal price was $3,000, of which we spent $1,000 on customer acquisition. This allowed us to have an optimal unit economy, as well as the budget to constantly evolve and research.

Related: 8 Pricing Strategies for Your Digital Product

3. Optimize the work of salespeople

Prompt order processing is an important part of quality service and a proven way to build audience loyalty. If it takes too long to call a potential customer back, they may change their mind and/or choose a competing product in the meantime.

Our benchmarks for communication speed:

• Excellent: the customer is called back within 5 to 15 minutes following application.

• Acceptable: the customer is called back within 15 to 30 minutes

• Alarm: a reminder within 30 to 60 minutes

• Bad: callback in more than an hour

In our experience, the longer the wait time, the higher the likelihood that a lead won’t convert to a customer (more than an hour cuts conversions in half). To reduce callback time, try implementing order distribution automation: 40% of managers with the highest conversion should receive 60% of lead volume. You can also test an incentive system (managers who call back faster receive a bonus).

Don’t neglect this important part of the sales funnel. If the company is large, a manager cannot tap into all the conversations, so allocate resources to implement a quality control system in the sales department. Quality control experts listen to sales managers’ conversations throughout the day, then score from 1 to 10 based on a number of criteria, including use of scripts, identification of customer needs, product presentation and handling objections. If a manager makes mistakes and is rejected, the client is passed on to team leaders and other managers with the highest conversion, who call them back. In our experience, this approach has recovered about 10% of abandoned transactions.

Related: Out-of-hours customer calls: How late is it?

Regardless of company size, optimizing budgets should be a constant goal of a marketing department, so follow best practices, including research-based decision-making, testing and experimentation, flexible pricing and proven quality control methods.