Research in the SME sector shows a strong correlation between small business owner‐managers and risk, on account of the high failure rates of small firms. High-risk situations identified by owner‐managers include business activities relating to cash flow, company size, entering new markets or new areas of business, and entrusting staff with responsibilities.
While starting up a small firm could develop into a lifetime investment for owner-managers, the investment is surely not without its risks. Just so, the enterprise that invests in marketing has the opportunity to elevate their business to a new level if they play their cards right in choosing a marketing strategy with a favourable risk/reward ratio.
The Evolution of Marketing in the Small Firm
According to Carson, the small firm’s marketing strategy evolves along four stages as the organisation grows from a start-up to an established business:
- Initial marketing activity: Marketing undertaken during the initial business set-up phase is usually activity intense. The marketing focus is mainly on products and their pricing, as well as the implementation of these products.
- Reactive selling: Once a new business has been introduced to the market customer enquiries are likely to start rolling in. Marketing activities during this phase are focussed on responding to such enquiries.
- DIY marketing approach: During this phase the small enterprise is starting to gain traction and develops a need for a more positive marketing approach. Because of a tight budget, the owner-manager is likely to take marketing responsibilities upon themselves, often resulting in disconnected and infrequent marketing campaigns.
- Integrated, pro-active marketing: In the final stage of development the small firm strives towards implementing a more sophisticated marketing strategy. Marketing activities undertaken fit within bigger campaigns, which fit within a long-term strategy. By this stage, the enterprise is usually considering recruiting specialised marketing management.
Has your business evolved to the place where it has become necessary to invest in a long-term marketing strategy under specialist marketing management? Here are 5 tips for reducing the risks of taking the big leap into Modern Marketing:
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Choose Marketing as a Service
Modern marketing takes a technical and scientific approach: the latest digital technology is employed by marketers who are skilled at navigating the ever-changing landscape of marketing technology.
Implementation of an in-house marketing team or even just a single marketing manager means:
- significant additional staffing costs, from recruitment costs to training
- the acquisition of expensive hardware and software that will depreciate and could be out-dated a year down the line
By making use of Marketing as a Service instead of investing in an internal marketing department, small firms keep their cash flow healthy while capitalising on the benefits of specialist marketing services.
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Stick to Your Core Business
The small enterprise without the budget for an in-house marketing specialist could be tempted to distribute marketing tasks to various existing employees. In other cases, owner-managers volunteer taking on marketing responsibilities out of a desire to stay in touch with the business and ensure a personal approach to marketing.
While it may seem like a good idea to allocate marketing tasks to existing employees or the owner-manager, research warns that multi-tasking reduces the overall operational efficiency of individuals.
In light of this, small businesses who are not capable of employing dedicated marketing staff would be better off outsourcing marketing responsibilities.
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Partner with a Specialised Marketing Agency
Small firms would be wise to enter new markets or new areas of business with an expert partner by their side. While the guidance of other entrepreneurs could prove extremely valuable, owner-managers should not underestimate the value of partnering with a specialist marketing agency.
By partnering with a marketing agency who have experience in launching enterprises in relevant markets and business areas, organisations reduce their risk of failure in the unknown.
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Beware the Peter Principle
When launching a new marketing program internally, small-firms would be wise to heed the Peter Principle. The Peter Principle, according to Investopedia, is:
“an observation that in an organizational hierarchy, every employee will rise or get promoted to his or her level of incompetence. The Peter Principle is based on the notion that employees will get promoted as long as they are competent, but at some point will fail to get promoted beyond a certain job because it has become too challenging for them. Employees rise to their level of incompetence and stay there. Over time, every position in the hierarchy will be filled by someone who is not competent enough to carry out his or her new duties.”
Entrusting staff with responsibilities is a risky gambit, and so is allocating marketing activities to an enthusiastic yet unskilled employee. While one of your existing employees may be eager to move into the role of marketing, incompetence is sure to lead to frustration and loss of self-confidence for the employee and potential damage of reputation for the firm.
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Mind the Performance Gap
Modern marketers are focussed on producing results that are meaningful within their discipline: website visitors, subscribers, followers, leads, and sales.
The C-suite, on the other hand, measure business success by considering metrics such as Customer Acquisition Cost (CAC), Marketing percentage of CAC, Ratio of Customer Lifetime Value to CAC, Time to Payback CAC, Marketing Originated Leads percentage, Marketing Influenced Customer percentage.
Small firms can overcome this performance gap by taking a performance driven approach to marketing. Performance driven marketing approaches such as inbound marketing, connect marketing actions to the impact they have on organisational goals, allowing organisations to measure the success of their marketing program.
Modern Marketing is Performance Driven
Just like any investment, an investment in specialised marketing comes with a certain level of risk. Small businesses can improve the risk/reward ratio of their marketing strategy by choosing marketing as a service, keeping focus on their core business, partnering with a specialist marketing agency, ensuring competency of marketing staff and opting for a performance driven marketing strategy.
