EXTRA!

Why there's more to marketing than just advertising. By Mark Alexander

Some view it as a black art, while others see it as a sleeping giant. Love it or loathe it, marketing is a fundamental component of modern business. Indeed, in the ever-crowded broking marketplace, getting your message across to consumers has never been more vital.

As Philip Wilkinson of Business Link for London explains, marketing is not simply down to advertising and promotion. “That’s only one facet of it,” he says. “Marketing is an approach, an attitude and a process. It’s about understanding your clients, getting close to them and meeting their needs.”

According to a recent study carried out by YouGov and T-Mobile, small businesses miss out on nearly £20,000 a year through lost custom. With a hefty price to pay for failing to foster close customer links, it’s worth examining your current marketing activities and seeing if they can be improved, streamlined or both.

So marketing is obviously important – the first question is how much money should you put towards it? Unfortunately, it’s not a cut-and-dried answer: the latest marketing trends survey from the Chartered Institute of Marketing found that about a third of companies spend between three and five per cent of their turnover on marketing, excluding salary expenses, while around a quarter spend between six and 20 per cent. “Companies with a turnover of less than £1 million tend to spend a little more than larger companies,” says Ray Jones, Head of Communications at CIM.

Once you’ve got a marketing budget, where to begin? With the marketing mix encompassing everything from local advertising to event sponsorship, research is everything. Ray advises that you consider the effectiveness of activities such as attending conferences, placing an ad in the local paper or running a direct mail campaign. Will your message reach your target audience? Is it truly cost effective? Some of this knowledge will come through trial and error, but it can be helpful to get advice from other businesses or professional bodies (see box, left). Hiscox is also developing training workshops for brokers on consumer insight to help you unlock opportunities for growth. Details will be announced shortly.

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One popular marketing method is direct mail, or DM, as it is useful for targeting specific audiences and even personalising mailings using digital printing. And it seems it can deliver a good return on investment: UK companies invest around £37bn on DM each year, generating sales of £107bn. When developing a DM plan, consider response rate, frequency and content, among other things. First, response rate: while many marketing professionals say that you should aim for a three per cent response rate to a DM campaign, Robert Keitch, Director of Media Channel Development at the Direct Marketing Association, doesn’t believe this is set in stone.

“In my book, it doesn’t matter if you get a two per cent or an 80 per cent response rate; it’s knowing what your goals and objectives were when you started out that matters,” he says. “How else would you know if the campaign was successful?”

Considering marketing is all about understanding your customers, it follows that the frequency at which you send out DM should depend on their preferences. “Don’t risk alienating customers for want of listening to them,” warns Robert. “Ask them how often they would like information from you. If the information is worth having, they’ll want it more often. It’s about the three Rs – respect, relevance and reward. These three principles should be at the heart of any communication.”

And what of the message itself? As well as including the obvious – product features and benefits, price and contact information – Robert says marketing messages should be shaped by your knowledge of your existing customers and/or replicated from what went well in the past. “The important thing about existing customers is that you know a lot about them,” he says. “How could you tailor your communications knowing what you know? If you’re targeting cold businesses, look at your history to find things that other customers found useful.”

Of course, direct mail is just one of many ways to reach customers, both existing and potential. The marketing mix is a complex amalgam of disciplines, and gaining a detailed understanding of what your customers want is the first – and most important – step towards providing them with what they need.

 

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