The purpose of promotion is not to sell anything, it’s to attract potential customers with whom you can communicate about your company’s products and services. The ideal goal of a promotion campaign is to attract the most qualified potential customers, for the least cost, while at the same time creating a good impression of you company.
I have found that contractors are not always sure what the difference is between promotion and sales. So to illustrate the difference, let’s say you’re stranded in a life-raft in the middle of the ocean, and in the distance you see a ship passing by. Shooting a flare gun to attract the attention of the ship is promotion. Talking your way onto the ship is sales.
The purpose of promotion is to attract people’s attention and create interest. The purpose of sales is to get some of these people that you attract to purchase a product or service.
It’s been my experience that promotion is one of the most difficult areas for contractors. They have two basic problems with promotion:
- Contractors are busy running their business and generally don’t have the time or attention necessary to devote to promotion.
- Contractors have a hard time finding a person or company that can do the promotion for them that actually produces a good return on investment (ROI) back to the contractor.
The 10% Rule
As a general rule of thumb, as a contractor I am willing to invest up to 10% of my gross sales for any project back into marketing. As an example, if I put an ad in the newspaper and that ad brings in $1,000 in gross sales, I’m willing to pay up to $100 for that ad. If I spend $500 per month on a Yellow Page ad, I will need to gross at least $5,000 each month from jobs from Yellow Page customers.
Unfortunately, my experience with newspapers and Yellow Page ads, at least in the Los Angeles area, do not bring in $1,000 for every $100 I spend in advertising. Therefore I don’t use these forms of promotion. Some other forms of promotions that I have tried and rejected for violating the 10% rule are mailers, flyers, TV and radio ads, and magazine ads.
Regarding internet marketing, I have had mixed results. In today’s competitive market more and more contractors are competing to attract internet customers, and for good reason. 81% of shoppers conduct online research before making big purchases. The challenge for contractors is to find the least expensive and most effective way to attract these potential customers to their company.
In the competitive internet market, most forms of internet marketing, while perhaps once effective, now do not meet my 10% requirement. They are either too expensive or do not attract enough customers for the money spent acquiring them. Pay-Per-Click advertising, while once quite effective is now too expensive for most contractors. The same applies to paid ads on specialty websites.
There is one form of internet marketing that is still quite effective. Search Engine Marketing (SEO) if done properly can definitely generate a good ROI for most contractors. I’ll go more into SEO Marketing in another article, but for now let’s move onto sales.