Presumed Prospects, Identified Prospects, and Core Customers

Media Choices

Media Choices

Martha was THE media queen at a large, St. Louis based advertising agency in the late 70s. She personally placed several millions of dollars with local media.

The St. Louis radio stations, television stations, newspapers, outdoor companies all came to kneel before her throne and pay homage.

For, you see, the ad budgets she tossed to local media reps as if she was feeding scraps to her pets, could make, or break, a media rep’s sales goal.

And Larry couldn’t get in to see her.

He’d called. Left messages. Sent flowers on her birthday. Arranged madrigal singers to serenade her office during the end-of-year holidays. But, no matter what could not get Martha on the phone, or to pencil him into her appointment book.

Until October of 1972, when Larry had a 15 foot banner made that said: “C’mon, Martha. Give Larry an Appointment. Call 314-228-7xxx.” He hung the banner on the building across the street, so that each time Martha looked out her third floor office window, she saw it.

Martha is an Identified Prospect

When prospects are identified, we have their contact information available.  Instead of sending a letter to “occupant” and hoping someone reads it, we address that offer to a specific person.

Instead of running a 30 second TV ad to reach the whole viewership in hopes enough of those viewers might be interested, we pick up the phone, dial a particular prospect, and ask.

Presumed Prospect:

The prospect goes to her mailbox, and retrieves an envelope from Smiling Ralph’s Auto Emporium addressed to “Occupant,” or maybe “Resident.” The letter says, “Dear Neighbor, its time for Smilin’ Ralph’s Legendary Upgrade Your Ride sale, this Saturday at Smilin’ Ralph’s.”

Identified Prospect:

The prospect goes to her mailbox, and retrieves an envelope from Smilin’ Ralph’s Auto Emporium addressed to her. The letter says, “Dear (prospect’s name), your 2006 Chevy Silverado is worth $15,575 toward the purchase of a new Toyota Tundra 11 Crewmax at Smilin’ Ralph’s.”

The General Public is Too Vast

If Ralph sends letters to the general public, he’s sending them to people who don’t drive; to people who just bought a car; people who will not buy a pickup; people who will not buy any foreign-made vehicle, and people who simply can’t afford one.

The more non-buyers Ralph can remove from the Presumed Prospect list, the greater the percentage of sales which result from offers he presents to those remaining.  This has the effect of driving advertising down cost per sale. All of his advertising becomes more efficient.

So, instead of sending the Occupant letter to everyone in town, Ralph uses some combination of geography, demography, and psychography to eliminate as many non-qualified prospects as is practical.  Its Ralph’s goal to to spend no money to reach people who won’t buy.  Its his hope a significant number of the remaining Presumed Prospects will.

We prefer to know more about our prospects, than less.  We like efficiency.

Like Ralph, we look for similarities in age, income, event attendance, radio listening, magazine subscriptions, and other purchasing habits among our current Core Customers. We systematically eliminate groups of people from our Presumed Prospect listswho don’t match the profile.

Of course, the ultimate in knowing “more” is to have their names, addresses, and previous purchase information.  This moves them from the Presumed Prospect list to the Identified Prospect list.  Getting those people to self identify is the primary function of two-step advertising.

So, Identified Prospects Are Better?

Not better. More efficient.

C'Mon Martha Banner

C'Mon Martha Banner

Larry was willing to pay to hang a banner in Martha’s view because he knew she was a buyer. A big buyer. His risk of spending to reach a non-buyer is zero.

The cost of the banner may make it questionable as a good investment, but the sheer size of the anticipated payoff made this one worth the gamble.  Of course, banners aren’t the only medium.  And they are costly.

Compare the cost of Larry’s banner with the much smaller cost of a local radio ad.  Ah, but radio presents another problem.  To schedule that ad, Larry would have to know which stations Martha listens to, and the time she listens. He needs to know whether she is paying attention, or if she’s chosen that exact minute to return a phone call.

Odds are high Larry won’t pick the right time to schedule his ad.  He’ll hedge his bet by purchasing ads on more radio stations, over greater periods of time, and for several more days.  Maybe Martha will hear one of them.  And unless Martha picks up the phone and calls him, Larry won’t even know when she’s heard it and he can stop paying for additional ads.  Yeah, radio’s an expensive way to reach one single person.

OK.  Larry could rent a billboard and put his message on it. Oh, wait a minute. Which route does Martha take to work? Does she drive, or take the bus?  Will she be more likely to notice the message going to work or coming home.  Larry is right back in the unenviable position of needing to buy a lot of boards, too.

And television?  Larry doesn’t know which television programs she likes or which of those she’ll choose to watch at the time he’s scheduled the ad to run.  Even if he did, can Larry be sure she won’t choose that commercial break as the best time to raid the ‘fridge?  Come to think of it, doesn’t Martha sing in her church choir?  On which night do they rehearse?  Is that the night Larry chose to run his ad?

Newspaper?  Which paper?  Which section?  What size ad?  How many days?  Which days?  Looks like a significant budget for newspaper, should Larry choose it.

Mass Media is a Terribly Inefficient Way to Reach a Single Buyer

But, odds are Martha isn’t the only radio listener / television viewer / outdoor or newspaper reader. She’s likely one of many. How many depends on the station (or location, or circulation), and the time of day (or placement).

How many of those other people may be prospects? Ah. Good question. That sort of brings us back to the basics, and back to the concept of Presumed Prospects, doesn’t it?

As a general observation, the more we know about a shopper / potential buyer, the more it costs to expose that shopper to our message.

This concept is important.  I’m going to repeat it. It always costs more to reach a highly-qualified prospect than one who’s marginally qualified, or not qualified at all.1 But, the more qualified that prospect is, the more likely she is to buy.

So, like nearly everything in advertising, the way to determine the best advertising program for your business is to try a few and compare.  The cost of each ad isn’t really relevant.  Divide the number of dollars resulting from advertising driven sales by the total cost of the advertising.

The Exception

Cash Register Receipt

Cash Register Receipt

We know far more about existing customers than about any Presumed Prospects or Identified Prospects. Well, we should.

People who’ve already bought are most likely to do so again.  Since you already know each customer’s name, her address (or e-mail address) and what she bought, you can craft an individualized offer and deliver it for the price of a stamp.2 (You do know this information, don’t you)?

There’s a grocery two blocks from my home.  If 30 days goes by and they don’t record any purchases from me, coupons for the exact brands I prefer appear in my mailbox. They offer me 30 cents off six cans of Campbell’s® cream of chicken soup, and ring up a hundred dollars or so of other groceries on my next trip in.

And, our relationship is invisible to that grocery’s competitors. No one knows they sent the coupons but them, and me. And maybe my Postman, but he’s not telling.

Customer Data Screen

Customer Data Screen

Do you have a system to capture the pertinent customer information from each sale?  You need one.  You need to identify the characteristics of your Core Customers and apply those to the Presumed Prospect lists.

I promise, better database management leads to more predictable successes when you’re fishing for customers.

Your Guide,
Chuck McKay

Marketing consultant Chuck McKayYour Fishing for Customers guide, Chuck McKay, gets people to buy more of what you sell.

Got questions about creating a customer database?  Drop Chuck a note at [email protected]. Or call Chuck at 304-208-7654.

1. Martha and Larry are real people. I heard the story from Larry, years after he retired. After three days of her friends, colleagues, and other media reps calling to ask, “Well, are you going to give Larry the appointment?” she did. And, not surprisingly, she eventually placed a schedule.

2. When you send offers to your core customers, call it “Core Mail,” to distinguish it from Direct Mail.

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The Ad Copy Paradox – the More You Include, the Fewer Are Included

Fishing 101

Fishing 101

Q: I keep reading that narrower focused ads are more effective, but I don’t have a very big advertising budget. I can’t afford to pass up anyone who might be interested in what I sell. Shouldn’t my ads include everyone?

A: Short answer, “no.”

Here’s why: Unless you’re a recording engineer, or perhaps a recording musician, you’re probably not interested in advertising for a new Pro-Tools plug-in. If you’re exposed to such an ad, you probably won’t even notice it. You definitely won’t remember it.

You do the same thing with all of those other products and services in which you have no interest: sumo wrestling, cheeses of the world, the position of the guy running for school board in some other district, crosspoint stitching, 18th century English poetry, building a wind-powered electrical generator, tourism guides to Toronto, and the genealogical history of your brother-in-law’s family.

What happened when you were “exposed?”

Did you consciously consider, then choose to ignore these offerings as they competed for your attention? Nope. You didn’t recognize any value to you, and stopped further consideration. Gone. Poof. No longer exists in your universe. Maybe never did.

All of those people you’ve been attempting to “woo” to your business react in much the same way. Either they are interested in your advertisement, and will allow more information to enter their “What’s In It For Me” filter, or they aren’t, and relegate your ad to “ignore” status.

Now, when it comes time to compose an ad for your business, people will not see “office supply store” and immediately think, “Hey, they probably have flash drives, too. I could go there and compare prices with the computer store.” Instead, they’ll see “office supply store” and immediately think, “I don’t need office supplies.”

You’ve already been dismissed.

Its not that people are too lazy to figure out what you’ve got for them. They made the decision to ignore what you’re saying long before such a puzzle might even occur to them.

This is why you must create your advertising from the perspective of a potential buyer. Potential buyers, by the way, don’t think of what they want in terms of “all their (blank) needs.” And as long as your ads say that, or “fast, friendly, courteous service,” you can count on being ignored.

But, what if instead, you’d created an ad that said, “We’re a modern office supply store. We recognize that in addition to paper, toner, and desk calendars, today’s office may need blank DVDs, hub adapters, and hard drive upgrades. Come visit our computer supply department, and while you’re there, pick up a 16-gig USB flash drive for only $17.95?”

Would someone who needed a flash drive react to that ad? Highly likely.

But you have more things for sale than flash drives, don’t you?  A whole store full of other things.   Hummm.  I guess you’ll need to create other ads for those items.

There is no universal bait. You must choose the fish you wish to catch when you’re fishing for customers.

Your Guide,
Chuck McKay

Marketing consultant Chuck McKay

Chuck McKay

Your Fishing for Customers guide, Chuck McKay, gets people to buy more of what you sell.

If you have more questions about copy strategies to sell more of what you offer, Chuck welcomes your email, or call him at 304-523-0163.


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The Book of Advertising Tests

The Book of Advertising Tests

Lord & Thomas "Book of Advertising Tests"

Former Canadian policeman John E. Kennedy not only created modern advertising (“salesmanship in print” and “reason why advertising”), he taught it to the copywriters of Chicago’s Lord & Thomas agency. At that time, he was the highest paid copywriter in all of advertising – a record he held until his pupil, Claude Hopkins, started earning more.

The Book of Advertising Tests is a collection of articles Kennedy wrote for the Lord & Thomas “house organ,” Judicious Advertising. Though it was published in 1926, the key points are timeless, and equally valid today.

Download a copy for your own library.

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Very Simple Newspaper Metrics

Originally Published January 22, 2006

Vintage Newspaper Ad

Classic Newspaper Ad

I’ve had the privilege of working with a few select clients who are willing to invest the time and resources to make their companies very good very quickly.

These are the business people who understand that their marketing deserves as much attention as their merchandising. They know that a shopper’s first personal experience in their store must be consistant with the image created in their advertising.

They have the discipline to track the results of every advertising campaign.

And for many of them, eighth-page newspaper ads turn out to be the most cost-effective investment1.

I was reminded of this when I came across a study by business-to-business magazine publisher Cahners Publishing (now Reed Business Information) to determine the average number of inquiries about products that were generated by various sized ads in their publications. Cahners Research looked at 86,002 ads in 34 of their publications. They analyzed nearly nine million inquiries for more information.

They concluded that the average number of responses increase as the size of the ad increases.2 Without intending to, it appears that they also make a case for smaller ads.

The Cahners Study shows that, much like the Starch “noting factors,” response falls off with decreases in ad size, but not on a one-to-one ratio. A full-page ad gets an average of 76 responses, but a half-page ad, which costs half as much, gets an average of 56 responses. And a quarter-page ad, which costs one-forth as much as a full page, gets an average of 52 responses.

Remember, we are not trying to reach the largest possible audience with this analysis. We’re trying to achieve the largest possible return on our advertising investment. The evidence is that smaller ads are more cost effective.

When compared on a cost per “sale” basis, the chart looks like this:

A full page ad returns 76 responses. A half page ad returns 56. When the ad cost is compared to the ad response, it becomes obvious that each “sale” resulting from the half-page ad cost only 21% as much as each sale which resulted from the full-page ad. Each quarter-page “sale” costs only 10% as much.

Let me repeat that: The cost per sale from a quarter-page ad is one tenth the cost per sale of a full-page ad.

Now, granted, the Cahners Study looked at technical magazines, and not at newspapers, but it’s conclusions reinforce what several of my clients have observed from their own advertising tracking.

This doesn’t mean that you now only need to spend one-forth or one-eighth as much. What it means is running smaller ads at a greatly reduced cost will now allow you to run those smaller ads more often.

Finally, these observations should only be used as guidelines. In addition to frequency of exposure, response to your advertising will be affected by several other factors, including:

The impact quotient of your advertising copy.  If you say nothing of interest to shoppers, don’t be surprised when they respond with disinterest.

Your share of voice. Think of this as the size of your ad budget when compared to the budgets of all of your competitors.

Your professional reputation, which is based on Customer Experience. How good are you at what you do, when compared to each of your competitors?

The market’s potential. The number of dollars in your trade area isn’t something that you’re likely to change.

And finally, your choice of medium. There is evidence that products with short purchase cycles will sell better when advertised in visual media, and auditory media will provide better results when used to promote products with long purchase cycles.

All of these factors become less guesswork if you’re willing to keep accurate records. Record the number of customers who buy from you each day. Record the times they return to purchase again each week, each month, each year. Calculate your largest selling items. Calculate the average ticket price. Track these averages and compare them to yesterday, to last week, last month, last year.

This will take fanatical dedication.

It’s too easy to say “I’ll bring those records up to speed tomorrow.” This is far too important to delegate the responsibility to an employee. And it’s all too much a reality that most business owners just do not have enough hours to handle the rest of their responsibilities and this as well.

What about you?  Will you find the time to go fishing for customers?

Your Guide,
Chuck McKay

Marketing consultant Chuck McKayYour Fishing for Customers guide, Chuck McKay, gets people to buy more of what you sell.

Questions about tracking the results of your advertising may be directed to [email protected]. Or call Chuck at 304-208-7654.

If you know someone who would find this article useful, please share it.


1 Please do not assume that I’ve just endorsed eighth-page ads at the exclusion of all other possibilites. As I pointed out in Is Bigger Really Better the only way to truthfully know your most cost effective ad size is to track responses to your business’ advertising.

2 Cahner’s Conclusion: “Inquiries, on the average will increase as the size of the advertisement increases. The type of audience reached and the content of the advertisement play a major role in the number of inquiries generated, as well. Certain audiences do not inquire at all. This data sheet makes no attempt at analyzing the qualitative aspects of audience or advertisement.

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Ten “Dids” to Examine Your Failed Ads and Make Them Work Next Time

Ringling Brothers Barnum & Bailey poster

Ringling Brothers Barnum & Bailey poster.

There are some pretty silly statements made about advertising. Many are quite obviously irrational.

I can’t advertise in July, the circus will be in town.” 

Don’t talk to me about advertising. Your publication carries my competitors ads.

I have all of the business I need.

Some, like “I tried advertising. It doesn’t work,” at first seem to be perfectly logical conclusions. The conviction of the people making this claim is unshakable – most likely because they’re describing exactly what happened to them.

Of course, if they had said, “My kid tried riding a bike, but he fell over. Bicycles don’t work,” or “I tried golf once. I didn’t get a hole in one. Golf is a stupid waste of time,” everyone would recognize the absurdity of the statements.

But every kid, (and every golfer) knows even common activities require some basic skills.

At its basis, advertising is simple.

Incredibly simple. Just deliver to the public your offer to sell something.

The public’s reaction, though, is not as uncomplicated as “I’ll buy” or “I won’t buy.”

Actual responses range from absolutely no interest on the unsuccessful end of the response continuum, to, on the successful end, people pounding on the door because the sign says the store opens at 8:30, and it’s now 8:32.

Why do most ads produce results somewhere between these extremes?

I’ve identified ten factors that could cause your advertising to produce disappointing results.

Causes #1 and #2 involve your offer.

Cause #1: Did anyone want the stuff you had to offer?

Sale Tag

Sale Tag

Ideally, businesses would identify and research a market, then develop what the customer really wants. In the real world, manufacturers create, and retailers stock things, they believe people will want.

Sometimes, they’re wrong.

When those retailers say to the world, “Hey, come and buy our diamonelle encrusted left-handed can openers,” people don’t say, “I don’t want any, thank you.”

They don’t say anything.

They care so little about the offering, they don’t even notice the ad, and won’t remember ever seeing or hearing it.

Cause #2: Did you offer what people needed when they were most likely to need it?

Think seasonality. Swimsuits don’t sell well in November. Halloween candy won’t get much attention in April.

Causes #3 – #6 involve the content of your message.


Did you hold shoppers attention?

Cause #3: Did your ad snag shoppers attention? Were you able to hold that attention long enough to deliver your offer?

There are three broad categories of advertising communication – entertainment, information, and engagement.

1. Entertaining ads can work, if there’s a direct connection between entertainment and the one thought you’re trying to plant in the minds of shoppers. In far too many ads the entertainment is not relevant to the advertising message.

2. Most ads offer information. Unfortunately, its about the advertiser. Good ads are about the customer. Instead of “We have a huge selection of clean, late model cars to fit any budget,” try “Admit it, you’re going to like the way people look at you when you wear Ajax.”

3. Engagement requires the shopper to pay close attention to, and consciously consider, the content of your advertising. Unless that shopper is ready to purchase, catching her with a marginally different offer won’t elevate your ad to consideration status.

Say the same things your competitors do, and rest assured that most shoppers will ignore you.

But say something salient, something highly meaningful, and watch the difference.


Cause #4: Did you engage? Did you actually say anything worth remembering?

Too many ads are tedious, dreary, boring, and monotonous. Are yours?

Just because you have a lot to say doesn’t mean your audience will sit still and pay attention.

Nobody gets emotionally involved in a laundry list of brand names, sale items, or the number of collective years of your staff’s experience.

The most you can expect of any ad is to convey one single, compelling idea. Find that one idea, and express it.


Old Spice Body Wash

Old Spice Body Wash

Cause #5: Did your ad persuade? Did you extend an invitation to buy (a call to action)?

Sometimes we notice a highly creative and entertaining ad campaign, only to find out later that the advertiser lost market share while the campaign ran. The “¡Yo quiero Taco Bell!” chihuahua, “Joe Isuzu,” and Old Spice’s “The Man Your Man Could Smell Like” campaigns come to mind. High entertainment value. Precious little persuasion.

Entertainment aside, shoppers are skeptical. No matter how truthful any claim you in your ad, people don’t automatically believe you.

That process which falls between demonstrating your evidence, and leading them to agree with your claim, is persuasion.



Your Professional Reputation

Cause #6: Did your ad complement your image?

People who project different personalities, depending on which group of people they’re associating with, are not trusted. Without trust, you don’t have customers.

Like people, companies have personalities, which are a critical part of their brand. Advertising is an extension of that brand. If it’s loud, insulting, self-centered, annoying, or otherwise offensive, people will assume your business is organized around those qualities.

What is it that people know about you? What is your professional reputation? What is your image among customers? Among non-customers?

Do you have an image?

How do you know?

Causes #7 – #10 involve external factors.

Cause #7: Did you choose the right medium? Did you have the right sized ad?

Think of advertising as your cost to acquire customers.

Costs per exposure, per thousand, or per rating point only matter indirectly. Media efficiency is calculated by dividing the number of dollars invested by the number of new customers you’ve acquired.

Magazines with tiny circulations but active readership may be a great investment. Regional television stations with the highest priced ads in town may also be a great investment.

Until you track the number of new customers each produces, and the average sale of each new customer, you can’t do a meaningful comparison.


Cause #8: Did you schedule your ads at the optimum frequency?

There are two factors which combine to make media impact. One is the size of the ad (in column inches, or seconds, or pixels), and the other is the number of times shoppers read  / hear / view it.

Exceptionally salient ads may only need one exposure. Most require multiple exposures to the ad before people respond to your offer.

Under normal circumstances you’re going to need to run that ad several times.


Old Refrigerator

Old Refrigerator

Cause #9: Did you allow enough time for shoppers to need what you sell?

People eat several times a day. They need new tires every year or two. They buy refrigerators and mattresses maybe once per decade. How many of them are in the market for what you sell at any given time?

Ads for short purchase cycle offerings should pay off quickly. The impact of grocery or restaurant ads can be measured in days.

Other products, which have longer purchase cycles require more patience, and more persistence.


The Plan

Business Plan, Illustrated

Cause #10: Did you start with a clear goal?

What was it you wanted to happen when you bought that advertising which didn’t work?

Did you expect to see new faces in your store? Additional referrals? Greater market awareness for your company (“getting your name out there”)? Sales increases? Additional goodwill?

If you don’t know what you were attempting to accomplish, how can you be sure your advertising DIDN’T work?

Advertising works. I suspect we all know that.

A former boss, when told advertising didn’t work, offered to run some free radio ads for the skeptic. He said, “Let me tell you what they’ll say: Free $100 bills at your business.”

No one ever took him up on it.

Maybe yours is one of those companies which has all of the customers it needs. Congratulations. I envy you.

Most every business owner I talk to, however, needs a steady influx of new customers.

Like playing golf or riding a bicycle, there are skills you’ll need to make it work. You weren’t born with the ability to run your own company, but you learned what to do, and when, and why. Likewise, you can develop the ability to profitably advertise that same company.

You’ll need to invest a modest budget, commit to some seriously detailed record keeping, and allocate enough time to develop and hone those skills. Thirty minutes a day for the next year will give you the rough equivalent of one semester of Intro to Marketing.

Fortunately, there’s a lot of great information available, and much of it free. If you’re ready to get started, drop me a note and I’ll send you a recommended reading list.

And take another look at the “Dids.” If you’re ready to start fishing for customers, isn’t time for you to give advertising another shot?

Your Guide,
Chuck McKay

Marketing consultant Chuck McKayYour Fishing for Customers guide, Chuck McKay, gets people to buy more of what you sell.

Questions about making your company’s advertising “work” may be directed to [email protected]. Or, call him at 304-523-0163.

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What’s the Boss’s Most Important Job?

The boss has a unique responsibility. And it’s not the one most people think of when they describe the duties at the top.

Robert Kiosaki, in his best selling business book Rich Dad, Poor Dad, explained that as an employee, you have a job. As a self-employed professional, you own the job. And the owner of a business hires people to perform the job.

So, in terms of making business happen you are either someone else’s employee, or you’re responsible. There are no other options. And though there’s an outside chance that in good times any business can just muddle through, over the next few years if you’re not aggressively pursuing new business you’re not likely to make it. Sorry.

Some people are just cut out to be employees.

Consider a carpet cleaning business. Not just any carpet cleaning business, this one was being contemplated by a young man who asked my help creating a marketing plan. He had worked for another, similar, business, enjoyed the work, and saw the profit potential.

We spent two days together researching and building that plan. When it was finished, I offered my best advice: DO NOT OPEN THIS BUSINESS.

The market was strong, there was room for another competitor, and the young man with the ambition and the new marketing plan actually enjoys cleaning carpets.

Unfortunately, he hates selling.

And, as we’ve already established, the owner’s primary function is to bring in the work.

Does that mean face-to-face selling? Possibly. But it definitely means that the owner can’t simply place an ad in the Yellow Pages and wait for the phone to ring. Business owners who avoid selling end up with skinny children.

At any given time, roughly 2 percent of any market is actively seeking what you sell. That 2 percent will come looking for you, or someone else who sells what you sell.

The other 98 percent?

You’re missing them. Most of your competitors are missing them, too.

Most of your competitors.

Care to know who’s attracting that other 98 percent? Those who actively sell the value of doing business with their companies.

The competitors who have television ads that are being watched by potential customers are getting some of the 98 percent. Those competitors who’s postcards and letters are making it to the homes, who’s public speaking and referral programs are producing familiarity, and who’s Yellow Pages ads are being read by the very people who need their goods or services are tapping into the other 98 percent.

But, like the young man waiting for carpet cleaning customers to find him, those businesses which wait for customers/clients/patients to seek them out are hoping that their “share” of the 2 percent will pay the bills. It won’t. After all, we’re discussing 2 percent of a pie that may be shrinking for a while.

What will grow your slice of that pie?

There are two things you can implement immediately, and you should be doing them both.

Find a reason to get back in touch with every customer and every former customer, then remind them of the reason they chose to do business with you. That reason shouldn’t be price.

If they were originally drawn to your business because of your selection, remind them that you can help them find exactly what they’re looking for. If customers chose you for the speed of your service, point out all the other things they can be doing when they finish with you. If they chose you for your detailed knowledge, help them recall the value of getting exactly what they need.

You may indeed lower prices, but only do it if it will help you to gain some of your competitor’s customers. And remember that he’s going to be strongly tempted to lower his prices, too. Reminding people of why you’re their best choice keeps you profitable.

Bringing in the business is the boss’s most important job.

Are you the boss?

It’s time to start selling.


Chuck McKay is a marketing consultant who helps customers discover you, and choose your business. Questions about marketing your business during tough times may be directed to [email protected].

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Speed up cash flow – Surviving The Recession – Part 6 of 7

Cash flow is tied to profit and loss, but makes allowances for lags which happen between the sale, and payment clearing your checking account.

The problem of a slow economy can work to your advantage if your suppliers grant you credit.

It can be fatal if you offer credit to your customers.

For the next few months its going to be critical that you have an accurate forecast of your company’s cash flows, and keep tight control over all of your customers.

Those folks who owe you.

Have you checked your customer’s credit history, recently? You should. All of them, including those who have (so far) paid on time.

Those with questionable payment history can be expected to delay their payments again during a cash crunch. Be prepared to cut back on their credit lines, and keep a close eye on potential defaults.

As soon as you detect a problem, get them on the phone. It’s much harder to ignore a phone call than a collection letter. Besides, your diplomacy will be even more appreciated in a one-to-one conversation.

Ask for a specific day that you’ll receive payment, and telephone your client again if payment is not received when they promised. Most will pay to avoid another call from you, and another explanation.

Speed up the process.

You can help your financially healthy customers to want to pay faster by offering a 1 to 2 percent discount for payment within two weeks. Perhaps you could go as much as 4 percent for those who pay in cash at time of purchase.

Include your invoices with each shipment of goods, if possible. If not, be sure to send them on the same day.

The Internet has become another powerful cash management tool. You can speed the billing process by e-mailing your statements and invoices (not to mention that you’ll save on printing and postage).

Accepting credit cards on-line or over the phone can also speed the process and reduce costs.


You’re probably already computerized, but have you explored the credit controls and debtor reports that are usually built into accounting software? Get familiar with these tools, and use them.

It’s as bad to dun customers who have paid on time as it is to ignore those who haven’t paid and are past due. Whomever on your staff handles collections will need real-time data to keep customers from taking advantage of potential inefficiencies in your operation.

Do what you can to preserve customer relationships, but recognize that there’s no benefit in maintaining a relationship with someone who can’t, or won’t, pay. And even your best customers may themselves have genuine cash flow difficulties. Be very careful not to extend too much credit and let them get even farther behind. Once the amounts owed appear impossible, even your best customers will become discouraged and stop trying.

If payments are lagging, consider a collection agency. Some will work for a percentage of the amounts they collect. Others will offer specific services for a flat fee.


Now, go to your own suppliers and ask for extended payments. Ask for better terms in the form of lower prices, lower interest rates, or longer payment periods.

Renegotiate any leases or other contracts which will soon be coming up for renewal. Consider reducing the amount of space you’re leasing.

Should you be changing long distance carriers, or looking into VOIP technologies?

Your personal credit.

Small business loans become much harder to acquire in tough times. You may be able to tap into your good personal credit to inject the liquidity needed to keep your company afloat. Keep close tabs on both your company and your personal credit ratings.

Perhaps you’ll find yourself in a short-term situation, and a one-time infusion of cash could make a difference. If your margins are high enough that you could discount your prices, maybe you should be looking into outside financing (factoring). This is a process in which you discount your accounts receivable and sell them to a factor (a short-term lender), for cash. Since this cuts into your profit, use it only as an emergency measure.

Whatever you call it…

This economic downturn is likely to affect your business. Keeping enough cash on hand to pay all of your obligations, even those you don’t expect, may help your company survive.

Chuck McKay is a marketing consultant who helps customers discover, and choose your business. Questions about helping your business thrive during an economic recession may be directed to [email protected].

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Accelerate Your Advertising and PR – Surviving the Recession – Part 3 of 7

This is a photo of a Boeing 747-200. This aircraft requires 219,000 foot pounds of thrust to get airborne, but only 100,000 foot pounds to cruise at altitude.

Think of your ads as the jet engines which power your company.

As soon as you remove the thrust, you’ve grounded your campaign. And that’s a shame, since it typically takes four to six months for a campaign to start producing solid results.

Conclusion: Do not interrupt your advertising during tough economic times.

Study after study has delivered the same results: companies who pull in their resources and hunker down to ride out the economic uncertainties fall way behind when things get better.

Those same studies show that companies who aggressively pursue revenue in good times and bad leapfrog over their competitors in the following years.

This may take a certain amount of faith, because the evidence that your plan is working won’t be available for months. If you’re getting a bigger share of a shrunken pie, it may appear that you’re standing still. At least, for now. When the pie grows, your share will grow, too.

Think of it as buying market share at a discount.

There are two reasons your dollars go further in slow times.

First, when you’re one of the few voices still speaking to the market, your share of mind increases.

Second, when you’re one of the few active voices, all of your media representatives will suddenly become VERY negotiable when it comes to rates.

The average recession in the U.S. has historically lasted eleven months. We’re half way into this one, so during your negotiation be sure to lock in those new, lower rates for a full year. (Longer if the media will allow it).

What does advertising do?

No matter what the economy, aggressive advertising can:

  • Generate immediate sales
  • Upsell current customers
  • Provide new leads and prospects
  • And, don’t overlook the long-term benefit: the more people feel familiar with you, the more likely they are to choose to do business with you.

    The strength of your advertising, and the revenue which results from it, will depend largely on your focus up to this point.

    Direct response will be less effected by the economy than will image advertising. The more transactional your messages have been (full of facts and details), the more you can expect business to continue.

    But, if you’ve been using brand-oriented messages (service and commitment based), don’t change them, since they tend to pay off better the longer you use them. (Remember, only 100,000 foot pounds of thrust to remain airborne). You will, however, want to create an additional transactional package to generate immediate cash, and to cover today’s operational costs.

    Focus on Value – and on family values.

    At times of economic uncertainty, people tend to “cave.” They spend much more time at home with their families.

    Consider using family scenes in your ads where possible. Dump the rugged individual image. Extreme sports and adventure are bad images during a recession.

    Do your ads cultivate a trust factor?

    Is the ad about you, or about your customer?

    Are you talking directly to your customer?

    Are your claims credible, or full of hype and sensationalism?

    Do you make a claim with full intention of backing it up, or do you know you’ll have to explain that claim because people will not understand the weasel clauses?

    Can you use someone else’s credibility?

    The concept is known as endorsed mailing. You send a letter endorsing another business to your customers, and he does the same for you with his. Select your endorsement partners with care. If the other business is trusted by his customers, you’ll be perceived as trustworthy, too.

    Or, work out deals with other businesses to stuff their flyers into your merchandise bags. Of course, you’ll reciprocate.

    Or, get three or four other reputable companies together and share the cost of printing individual offers on card stock, then mailing them all to your own lists. This one is known as “marriage mail.”

    Focus on your existing customers.

    Focus on media that you’ve proven will provide a sufficient return on your investment. This is not the time to experiment with ideas that might work to attract new customers. New customers are more expensive.

    Instead, apply the 80/20 rule, and invest whatever you need to keep your 20 percenters very happy with you.

    Cut money out of any project that you can’t prove return on investment (like trade shows, for instance), and use those funds to increase direct marketing to every customer in your database.

    PR is golden.

    Got positive quarterly results to report? Won any industry awards? Have a fabulous customer service story? Call your local media and share the news.

    What’s interesting about your story? If it’s positive growth during a recession, financial editors will want to know how you did it. If winning your national award draws attention to your local business, most editors will want to play up local pride. And human interest stories always make great content – especially on a slow news days.

    Public relations has two wonderful benefits: it’s much more credible than advertising, and it’s free (other than the investment of your time, and a few postage stamps or phone calls).

    In summary:

    When times are good, you should advertise. When times are bad, you must. But, don’t be reckless about it. Make every dollar count, now, to pay off in multiple dollars over the next few years.


    Chuck McKay is a marketing consultant who helps customers discover you, and choose your business. Questions about helping your business thrive during an economic recession may be directed to [email protected].

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    How Many Ads Do I Need To Buy?

    Originally published January 7, 2006.

    On Air light

    Radio studio On Air light.

    Too many times we design an advertising schedule to reach the “average consumer.”

    If you look at the usage of media by consumers, it’s easy to come up with averages. It’s much harder to schedule your ads for maximum return on investment.

    Take radio listening, as an example. Dividing the number of people listening at any particular time by the number who have listened over the course of the week, and then multiplying that fraction by the time they listened will give us an average “time spent listening,” say, 20 hours per week.

    But 20 hours is very misleading. Seminal researcher Alfred Politz1 divided the audience into equal fifths (quintiles). He discovered that not all radio listeners are created equal.

    When the average is 20 hours per week, the heaviest users, (the top 20%), stick with their favorite station for a full 60 hours per week. At the other extreme, the lightest users listen for only 2 hours per week.

    Within each quintile (equal fifth) the average listening might look like:

    Radio Time Spent Listening chart.

    Radio Time Spent Listening chart.

    Several studies 1 have confirmed that consumers of media are not equal, even within the medium. Each medium has very heavy consumption at the top quintile, which grows progressively lighter as each additional quintile enters the equation. This same pattern occurs in television viewing, reading of newspapers and magazines, and even the reading of outdoor signs.

    It’s been demonstrated that the average person needs to be “exposed” to your ad a minimum of three times within each seven day period 2 for the ad to be effective at motivating that person to shop with you.

    But, with each of our quintiles listening for progressively shorter periods of time, it’s going to take more ads to reach each successive quintile.

    And that makes sense, doesn’t it?

    Our top quintile listens 60 hours per week. If we run 3 ads per week, they’re likely to hear all of them.

    The bottom quintile listens for only 2 hours per week. Unless the ad runs during those two hours, they’ll never hear it.

    To assure enough ads that the bottom quintile will be exposed to three of them, we’ll need a schedule of 184 ads 3.

    Radio Ads Required to Reach Audience

    Radio Ads Required to Reach Audience

    184 ads? Per week? How much would you have to pay for 184 ads per week? I’m willing to wager that you can’t afford such a heavy schedule. At least, not long-term. You can’t afford to persue the bottom quintile. Without a monster advertising budget, one fifth of the potential audience will never hear your ads.

    Perhaps you could stretch the budget enough to afford 53 ads. That’s a schedule that could motivate the fourth quintile. Congratulations. You’ve broadcast enough ads to persuade quintiles one, two, three, and four.

    Of course, we now have another problem.

    The first quintile only needed 3 ads to “get it.” Run 50 additional ads per week once they understand your message, and it’s highly probable that you’ll irritate those listeners. Annoy them this much and they’ll refuse to do business with you. Somewhere around ad number 17 they’ll tune in some other radio station.4

    Customize your schedule for the heavy listeners and the light listeners will miss your ads. Plan to impact light listeners and you’ll repel heavy listeners.

    You’re going to miss half of the audience. There’s no way around it.

    Which half do you give up?

    The expensive half, of course.

    Your most cost-effective solution is to schedule enough ads to reach quintile one, quintile two, and about half of quintile three. Wizard of Ads © media buyers have determined that, on most radio stations across the United States, a schedule of 21 ads 5 each week will provide the greatest sales impact from the least number of dollars invested.

    Newspapers have a similar weekly buildup of awareness. Like radio, one ad is minimally effective. It takes the same three exposures a week to make newspaper advertising provide maximum return on your advertising investment. We’ll look at newspaper scheduling next time.

    And depending upon the purchase cycle, as few as 2% of those people will be “in the market” on any given week. You’ll need to run this schedule next week to get the people who are ready to buy next week. You’ll need to run it the week after that to reach the people who are ready to buy that week. You’ll need to… well, you understand. You’ll need to run it every week that you intend to stay open for business.

    However, some good news: the light users of one radio station tend to be the heavy users of another. And the average listener tunes into 3.6 stations per week. Find stations which share the same listeners, run 21 ads per week on each, and start getting spectacular results – assuming, of course, that your message is compelling and your offer is appealing.

    Your Guide,
    Chuck McKay

    Chuck McKay

    Chuck McKay

    Chuck McKay gets more people to buy what you sell.


    Questions about scheduling ads for the highest return on your advertising investment may be directed to [email protected].

    If you know someone who would find this article useful, please share it.

    Your comments are always welcome. How does your company schedule its ads?



    1. Beginning with the 1963 Politz Study of New York Radio.

    2. Effective Frequency, The Relationship Between Frequency And Advertising Effectiveness, Mike Naples. ANA Publishing, 1979.

    3. All figures based on Radio’s New Math, © 1978 Group W Radio.

    4. Radio Program Directors HATE ads which run in double digits daily. Of course, Program Directors also know that about the time listeners are just learning the words, Disc Jockeys say they’ll puke if that song plays again. Through the nature of their jobs Disc Jockeys have long Times Spent Listening.

    5. 21 ads per week, plus or minus two.

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    Bad Seduction

    I just read some advertising suggestions on an Internet marketing site that are beyond annoying. They are flat-out bad advice.

    They illustrate a complete lack of understanding of the whole persuasion process.

    First, small business owners are told that advertising often has a cumulative effect, so ad-driven sales may not be immediate. Then, they’re told how to measure and track the immediate response of their advertising.

    Reading past that little dichotomy, some of the suggestions included:

    · Use magazine response cards. Remember to code the cards if you use multiple publications.

    · Use a coupon in your newspaper ads. Code the coupons so that you can tell which publication generates the most sales.

    · Put a line in your radio scripts to “Mention this ad and get a 10% discount.”

    · Ask all new customers how they heard about your business.

    Make no mistake. These are all bad suggestions. Very bad. In addition to being very poor persuasion, each of these strategies assumes that your prospective customers are paying very close attention to your ads.

    Trust me, customers don’t.

    Good Advertising is Seduction

    Pretend with me for a minute that all advertising is an attempt to get a “date” with your prospect.

    How do these recommendations hold up under that scenario?

    Would you, for instance, send a response card to anyone you could possibly be interested in dating, which says “If you’d like to learn more about me, fill out your name, address, and your specific areas of interest in me, and apply your own postage to return it to me?

    No, I didn’t think you would.

    The advice contained in these recommendations also suffers from major misunderstandings in the motivations of customers.

    Coupons Assume That You Have Nothing to Offer but a Better Price

    Think about the implications of that for a moment. It suggests that after you’ve spent the money to advertise your discounted (and minimally profitable) price, that the customer has no reason to ever come back to do business with you again. Or at least, until you drop your price again.

    Mention this ad? In three decades of mass media experience, I’ve never heard of a single person saying “I heard your ad. Give me the discount.” Smart radio stations will never allow this on their air. Does that mean people don’t respond to advertising? No, it doesn’t mean that at all. It means that they won’t embarrass themselves by parroting your line. Not surprising, is it? Most people won’t admit that advertising affects them in any way.

    Ask new customers where they heard about you?

    Customers Don’t Know Where They Heard About You

    Oh, they’ll try to give you an answer. Really though, your advertising isn’t important enough for them to remember exactly what they learned about you, let alone the source of that information. But because they’ll want to be helpful, they will guess. They’ll usually guess wrong.

    There are two major problems with any of these “track your response” strategies.

    · They provide bad information. Bad information is worse than none at all. It gives you a distorted view of reality. Which leads to the second problem:

    · You’ll be tempted to make decisions based on this bad information. You will frequently make the wrong decisions.

    Consider this, instead. Send the object of your affection an “I love you” message.

    Does it matter whether your “I love you” comes in a telegram, an e-mail, a card, or over the phone? Or is the expression of love the most important consideration?

    Does it matter whether your ad message is delivered in the newspaper, over the radio, on cable TV, or by direct mail? Or is the message the critical part?

    Your advertising will improve by orders of magnitude when you spend less time attempting to find the most effective medium, and more time searching for the most effective message. Consider the message to be the bait you use when you’re fishing for customers.

    Your Guide,
    Chuck McKay

    Marketing consultant Chuck McKayYour Fishing for Customers guide, Chuck McKay, gets people to buy more of what you sell.

    Got questions about tracking your advertising? Drop Chuck a note at [email protected]. Or call him at 760-813-5474.

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