The Principles of Marketing & Advertising
In this post we are going to walk through the movement of ‘traffic’ and how to move someone from never having heard of you or your company all the way to getting them to buy from you. Then reverse engineer practical tactics to achieve the goals that I highlight through this post.
My definition of advertising:
“The process of introducing yourself to someone and working hard to convince them that you are worth their money”
Often when we talk advertising we crunch it down to numbers and while that’s great we often forget there is a human underneath all of those figures and that we are human too. We expect the same things to happen all the time but business is fluid, business is tough and business is business!
We have to be smart about where we spend our money, we have to know when and where to put our time and resources and that’s ultimately why I’ve created this. I believe there are so many people giving up on working their customer base and relying on constant new business to move forward. It doesn’t have to be this way.
In this post I am going to use the word ‘funnel’ a few times and I want to start by clarifying what that is. The term is NOT specific to digital advertising and is actually a general term for identifying stages of a customer journey.
The standard marketing/advertising funnel consists of 3 stages:
That’s saying hello, giving the consumer a chance to choose you and then getting them to buy. We do this in big and small circumstances all the time.
Walk into a shop and you’ll be presented with an offer, you’ll consider if that’s relevant to you and the retailer will have a special price or something similar to try and increase the conversions. Go online and you’ll see an advert on Facebook, you’ll read a blog, then see another Facebook ad with something for sale from that person relevant to the blog you read, then you’ll go to a landing page designed specifically to sell you the product. Some people develop funnels that are incredibly intricate and complex. Some build the most simple funnels in the world.
Why use a funnel at all?
Well consumers need to trust you to buy, so this whole process is geared towards increasing trust and providing them with the confidence that what you are selling will achieve its objectives and that they can trust you to ensure it’s delivery.
COLD TRAFFIC – TOP OF THE FUNNEL – AWARENESS
This is the stage of saying “Hey – how are you? I think we’d be a great fit so let me be upfront with you and show you who I am and why I do what I do”. The WHY is really important here. If you’ve never seen it then watch this short TED Talk from Simon Sinek on ‘The Golden Circle’.
At this stage we can use ‘interruption marketing’. Which is where we can engage a potential consumer without the expectation. Think of a Facebook ad – you’re just scrolling through and there are ads there from people you’ve never heard of.
As you can imagine the key here is to stand out (great creative) and to provide a tonne of value (great content with real substance and value). How you do that depends on the platform and the context.
Some examples of good things for the Cold Traffic stage are:
- Social media posts (designed for sharing)
- Guesting (other peoples podcasts/blogs)
The real key with this content is that it should be easily and readily shared in an authentic way. It should be heavily branded as well so that people start to recognise the name/brand/company name.
The best marketers in the world are now thinking about how they are going to take advantage of this new flow of traffic and how they are going to get them to move on to the next stage of the funnel.
WARM – MIDDLE – EVALUATION
Now you’ve got some people seeing your social media posts, visiting your website, listening to your podcast or similar, you have to get them to move to the next stage of the funnel to ‘warm them up’ and move their trust in you further.
There are lots of ways to do this but we need to explore something called ‘Pixelling’ and look at how to take advantage of this. It’s all about your website combining with social media.
When you visit a website a cookie is dropped on your computer and this allows the person that placed the cookie to communicate with you via other platforms. It’s been around for a while now but if this is still new to you then it’s when you go to a website and suddenly their adverts appear everywhere you go on the internet.
The key with this is to set up a clever system in the back end so that you are getting the right offer in front of the right person at the right time.
A good example of this would be this page. I’ve pixelled you…pixelled you real good. Yes, I am aware how wrong that sounds.
Now that I know you are here though I know that you are interested in the fundamentals of marketing I can send you a Facebook or a Google advert to show you more things around this topic.
In this warm phase all I really want is your email address. Why are emails so important? Email marketing is dead right? Wrong!
For one very big reason. Once I have your email, if I do a good enough job of balancing information and sales, keeping you happy and keeping you active I never have to pay for getting a sales message in front of you again. You would have joined the list for a reason so as long as I hold up my end of the bargain I’ll have paid for your acquisition already. THAT’S THE BIG REASON! I no longer have to spend money to make money! Aka PROFIT.
So how do we turn cold traffic into getting an email. Well, we can send you adverts on something relevant. If you go visit my branding blog the chances are you might see an ad for a branding guide called ‘5 Simple Questions To Unlocking Your Brand‘ because they are related and I think you’ll find it interesting and high value.
This is what I’ve come to call a ‘Lead Magnet’. This was introduced to me via the fantastic team over at DigitalMarketer.com who are a great educational facility for those looking to take things to the next level (that’s actually how I started this company, I downloaded a Lead Magnet of theirs!).
A ‘Lead Magnet’ is something that you give someone in return for an email address. It should be easy and quick to consume while containing the first part of a bigger puzzle. Don’t give everything away here, we want people to come back for more. The balance here is being valuable but ensuring there are more options after they have opted in.
A great way to figure out a good ‘Lead Magnet’ for your business is to use your main product and service and take a small piece of that out. That alone is useful and then it will automatically have a perfect fit for your business and your audience because it’s part of what is already selling so well. Remember as much as it works for you it’s about not giving them all the answers, you also don’t want to overwhelm them.
If a ‘Lead Magnet’ isn’t available or doesn’t seem right I might just send you an ad to go follow me on Facebook, Twitter, Instagram, Snapchat or another social media platform because that all counts towards something called ‘Earned Media’. Where you have spent time/money to get access to someone for marketing purposes.
From there I can send you Facebook adverts as well as that’s an option, even if you’ve never visited my website I still have the ability to market to you from within the platform and move you a little down the funnel.
If you are listening to a Podcast I create then maybe I’ll say “to check out everything we have spoken about today go check the show notes at consciouscreactives.co.uk/podcast”. Guess what happens when you go there? BOOM. PIXELLED. I can then send you an advert based on the Podcast topic thats relevant or even get you to subscribe to the podcast on iTunes. All moving you forward a little bit.
HOT – BOTTOM – CONVERSION
Now that you have a solid understanding of the first two stages of marketing (Cold & Warm) you can get out there and start generating leads.
However – you also need them to buy from you.
This is where we identify our hot traffic and do what we can to turn them into a customer.
The key here is using the above tactics once again, email them, retarget them, hit them along all the points that you can. Some examples of Hot Traffic
- Prospect has seen a sales page but has not purchased
- Prospect has signed up for a Lead Magnet but did not buy anything
- Prospect has abandoned a cart with items in it
- Prospect has been sent a proposal/contract
There are several ways to move these guys forward and this for me is where a lot of companies don’t spend enough time and energy. As I said above you’ve already paid for these leads so why wouldn’t you do everything in your power to get them to the next stage and make a purchase?
One of the most effective ways to do this is use a ‘Trip Wire’ product. Again a borrowed term from the DM team and this basically refers to a product that is either heavily discounted or is simply a small price to start. It’s said that a product under $50 means a spouse will not have to check and can buy on impulse. What we want though is an immediate purchase so I recommend anything from $5-$20 (unless you are selling something for THOUSANDS as your main offer – in which case you can increase it).
There is a psychological process when someone makes a purchase from you and it doesn’t matter how much for. This is a key part of getting these customers to not just buy once but to make repeat purchases. Why such a focus on this? Well there are 3 ways you can make more money:
- Increase the number of customers
- Increase the average transaction value per customer
- Increase the number of transactions per customer
Only when you start to make a combination of all three will your business increase revenue.
When taking the time and energy to turn as many of the already paid for leads into customers and get that change in psychology you are addressing point number 1. Increase the number of customers. Remember once someone has bought from you once they are much more likely to buy from you again.
We are using this low money product as a gateway to a much larger purpose. Leading them through the process of what it is like buying from you removes the barriers on a bigger purchase. What’s your customer service like? Do you invoice quickly and accurately? How easy is to get a refund? Answering these questions only leads to a much better relationship.
Some good ways to introduce the trip wire to a prospect is on the back of a sign up page (a thank you for signing up page) and via email promotions both automation series as well as one off campaigns. This is where it really pays to be super organised about your identification of prospects and customers throughout their journey through things like email tagging. It makes it so much easier to introduce prospects to new things that are appropriate to them! Inappropriate things make people unsubscribe.
WHITE HOT – RETENTION – MONETISATION
If you have already paid to acquire a new customer then you have to move them through the other ways to increase revenue, get them to buy higher priced products to increase their average value (total sales/total number of customers) or increase the number of times they buy (get them into a subscription).
When I first read this I was MIND BLOWN.
Great marketing leads to new customers but then create a system in the back to increase their value means you are truly making every single connection with your customers count.
What I truly love about this system is that it forces the business to create products that people want, to focus on their customer service, their standards as a company as a whole. It’s not just ship them in and take their money. It’s about creating genuine loyalty and connection between brand and consumer.
This is what I believe capitalism to be all about. It’s not about making a bazillion pounds it’s about creating wealth for the world through ethical and sustainable practices that encourage the safe practice of communication and openness. It’s about working hard for one another not for the gain of the few.
If you create a business that is reliant on retention then you must find ways to create reasons for your customers to stay. Do a great job, deliver on your promises, go above and beyond. There are many examples of great customer service but it’s about how you set your standards.
Back to my above point re: emails and being appropriate. A fantastic way to generate revenue is to run a flash sale. Where you give a product discount and sell that via email. You’ve already paid for the lead and potentially that person becoming a customer. Why not show them a new product? Move them into an entirely new product line?
If you suck at service and being genuine then you’ll have immediately lost your opportunity to get the open and click through rates critical for a flash sale to work. That’s why it’s so critical.
Another great way to get repeat transactions is to set up a subscription model. There are so many things that can be sold on subscription, some of our clients sell coffee monthly and some of them sell access to a private Facebook group full of professionals within their industry that can help solve their very specific problems. Membership groups require a lot of work and again your service and management has to be absolutely on point for the group to thrive.
Let’s run some math on this whole process just to show you the potential of this system.
I spend £1000 on Facebook ads directing my target audience to a blog on why branding is so important. I get clicks at a modest £0.40 per click.
That’s 2500 clicks through to the blog. I got a 1% conversion rate from the on blog ‘Lead Magnet’ optin forms to generate 25 leads for a CPL (Cost Per Lead – total spend/number of leads) of £40.
I’ve got that blog ‘pixelled’ for Facebook & Google Display Network. I spend a further £500 on retargeting/remarketing to a landing page for the ‘Lead Magnet’ and that gets 60% of the original audience back so another 1500 clicks. The page has a 30% conversion rate giving me 450 leads.
Now my CPL is £3.16 (£1500/475 leads).
That’s the Top (Cold) traffic moved down to the Middle (Warm) stage.
It’s time to turn them into Bottom (Hot) traffic now by offering them a Trip Wire.
I show all that traffic the Trip Wire through a special landing page after they optin and by sending them an email automation series that isn’t pushy but is not afraid to ask for the sale!
I got a 10% conversion rate on my £10 product which is a branding worksheet.
47 people purchased at £10 giving me £470. I can work out now how much it’s cost me to get a new customer.
My CPA (Cost Per Acquisition – total spend-total sales/total customers) is ((£1500-£470)/47) £21.90.
That’s a great piece of information to know. This way of getting customers costs me £21.90 and then as we work down the funnel we can see how much profit is made, look at our cash flow and see how many customers we can afford to buy right now and with this we can always check back against cash flow and easily predict future sales.
Now I’ve got 47 customers that have made a purchase it’s time to make sure that they got exactly what they wanted, make sure they found it useful and make sure they are clear on who we are, who I am as the head of the business and where they need to go from here.
I am going to offer these guys another product. This time it’s a done for you Branding and Style Guide for £500. Again 10% of these guys decide this is a great idea and they buy it.
We sell 5 units and make £2500.
We also invite all of the 47 customers to join us for a monthly subscription service where they get access to a tonne of content related to all areas of marketing and advertising, not just branding as well as a Facebook group for ethical business owners and exclusive content from me and my team on the latest trends in digital as they happen. For this we charge £29 and each member last for an average of 9 months with us.
25% of those that bought our ‘Trip Wire’ go on to purchase a membership with us.
That’s 12 people.
12 x 29 x 6 = £2088.
Let’s tally up.
Spend = £1500
Sales = £5058
ROI = 237%
Profit = £3558
Now before we start celebrating we can always ask ourselves – what more can we do?
So I invite the 5 customers that made the £500 purchase from us to join me for a 1-1 call where I am going to help them out and give a little pitch of our full “done for you” agency retainer, which starts at £2800 and is a minimum of a 3 month contract.
1 person decided we are a great fit and signs with us. This pushes our sales to a phenomenal £13,458 on our initial £1500 investment.
Now we know the variables and the opportunities we can spend £1500 a day and have a reasonable expectation of how much we can expect in return over the course of 30 days (we have to be sensible about how long it will take each person to go ahead and make the various purchases – this is called Sales Velocity and does have a big impact on all this – but that’s another blog post).
In this example we can see how the system works but the key thing to remember is the conversion rates. If you didn’t take the time to build a real relationship, introduce products stage by stage the chances are these would drop off massively and you might have to pay £1500 to just break even by the end!
On the flipside of that if you don’t add in higher priced products or a good membership offer you just lose so much profit opportunity.
Business is all about balance. Good days and bad.
I truly hope this has given you loads of food for thought. As a special thank you for reading all the way through this I’d love to hear from you. Send me an email [email protected] and let me know what questions or problems you’ve got and I’ll do my absolute best to help. Our mission is to grow the revenue of 5000 Socially Responsible Businesses by June 2021 – we’ve got a lot of work to do and will take all opportunities to do so.