Many small business owners fall into the trap of believing that the only way to improve their revenue is to use advertising to drive more traffic to their business.
The model looks something like this – Traffic x Conversion Rate x Average Sale = Revenue.
The main problem with this model is the assumption (supported by the ad salesman?) that the conversion rate is fixed. They think they can’t change it. This assumption leads to the emphasis on building traffic, which means more advertising. But small business owners don’t have big advertising budgets to drive traffic up. They would be better served by improving their conversion rate (and raising their prices, but that’s a different post).
How do we get better conversion rates? Here are a few ideas:
Better targeting of your advertising – First you need to know exactly who it is you want to reach with your advertising. Once you have determined your ideal prospect profile, then you can determine the best way to
- find them and
- communicate a meaningful message to them.
This seems like common sense advice, but one of the main reasons small business owners view advertising as prohibitively expensive is because they follow the approach of trying to spread their message as widely as possible, hoping that the right person will happen to notice it and remember them when they are ready to make a purchase. In order to properly focus your advertising, you must do your homework to define your ideal customer and the problem(s) that you solve for them. Otherwise, you are doomed to fall into the trap of the “advertising idea of the week.”
Improve the quality of the referrals you receive – the two main complaints small business owners tend to have about referral marketing is
- the inconsistency of receiving new business from referrals and
- the amount of time spent chasing poor-quality referrals.
The first issue usually stems from the lack of a system for obtaining and managing referrals. The latter issue can be corrected by educating your referral sources so they know how to identify your ideal prospect and how to explain what you do.
Improve your conversion process – again, you need a system. It won’t do you much good to increase the traffic to your door if you don’t have a system in place to move them through the different customer stages to help them to Know, Like, and Trust You.
If you don’t have a conversion system or if your system lets prospects “fall through the cracks,” driving more traffic to your door may very well damage your reputation and your business. Improving your conversion process is one of the most effective ways to increase your sales without increasing your marketing budget.
