Top 5 Must-do actions before you advertise

Its easy to spend a fortune on advertising and there are plenty of magazines, websites and fairs eager to take your cash. With a little preparation in these 5 areas you can avoid costly mistakes:

Decide who is your ideal customer
Work out your target acquisition cost
Have a method for asking and recording how customers found out about you
Set a marketing budget
Schedule time in your diary to spend on marketing

Your ideal customer:

If you know who you are trying to reach, you can make better decisions about where and how to promote your product or service. Be specific. For example a photographer might define their target as “couples getting married within a 25 mile radius of Norwich, looking for reportage style and with a budget of at least £1,000 for photographs”

Work out your target acquisition cost

Put simply, how much are you willing to spend to buy a customer? It’s not difficult to calculate, but it does take a few steps, so bear with me!

First work how much the average customer spends in total – this is the customer lifetime value.

Then subtract what it costs you in time and materials to provide your product or service. What you are left with is your gross profit. You need to subtract an amount to cover your fixed costs – rent, heating, telephones etc and then decide how much of the rest you are willing to spend to acquire the customer.

Typically, this works out at around 15% of the lifetime value so this may be a good starting point if things are getting too complicated.

Now you have your target acquisition cost you can make more informed choices about your advertising options. By taking the cost of the advert/fair etc and dividing by your target acquisition cost you know how many sales you will need to achieve and can work out whether this is realistic or not.

Know how your customers find you

“Can I ask how you heard about us?” is one of the most powerful questions you can ask. Make sure you ask every customer how they found out about you – and record the results. Its easy to create a simple spreadsheet with the customer, how they heard about you and how much they spent.

You can then track how each of your advertising activities is performing – you may be amazed at the results. It’s important to record the value of each customer so you can make informed decisions about which activity to continue. An advert in a particular publication might bring in lots of enquiries but only a few low spending customers – while you might not meet many brides at your local wedding fair but if those you do see place large value orders it may be very profitable.

Set a marketing budget

Your business plan should include a section on marketing – how you plan to reach your prospective customers – and this should include the expected costs.

Decide how much you want to spend on promoting your business and then break this down across the different activities. You might decide on something like this (I’ve used percentages rather than actual figures):

10% internet directories
50% wedding magazine advertising
30% wedding fairs
5% Offers and incentives
5% Unallocated
I like to leave a small amount unallocated for last minute or too good to miss opportunities.

Schedule time in your diary to spend on marketing

Ideally you should allocate time every week to spend on activities which develop and promote your business. If you wait until you have some spare time you may find yourself in a classic “feast and famine” situation where you are snowed under for a period followed by a spell of struggling to find work.

By setting aside, say half a day a week, for marketing – updating your website, preparing for a wedding fair, networking and so on – you will be continuously developing and building your business.

Of course, wedding businesses tend to be seasonal so you can aim to spend more time in the off-peak periods reviewing your marketing and gearing up for next year. But if you don’t keep things ticking over all year round you can exaggerate the seasonal effect and end up with a stagnant business and cashflow problems.