While SMEs rarely suffer from a lack of potential marketing channels (paid social, email, SEO, etc.), determining which channels to prioritize with available resources is typically the greatest challenge facing these companies.
For SMEs, identifying which type of marketing activity generates the highest return on investment isn’t necessarily based on selecting the latest “hot” marketing tool; instead, the highest-ROI activities for most SMEs are those that are part of a functional ecosystem. This includes systems that: 1) attract qualified leads, 2) continuously follow up with those leads and 3) encourage repeat purchases from existing customers.
Key Takeaways
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Retain Your Existing Customer Base
Often, the simplest and least expensive opportunity for generating additional revenue lies within retaining your current customers rather than acquiring new ones. Customers currently working with you already know your company, have purchased something from you previously, and have overcome their typical hesitation to making an initial purchase. Re-contacting them in some manner usually costs significantly less than acquiring a completely new customer.
There are numerous forms of retention marketing. Examples include sending an e-mail after a purchase thanking them for their business and inviting future visits, sending reminders to renew contracts or send items in a timely manner, recommending other related products or services during communications, or having members of the sales staff personally contact clients.
It’s essential that communications resonate with each individual customer. Many customers don’t react positively to continuous streams of promotional communications. Instead, they prefer communications that relate directly to prior purchases, timing of previous interactions with the organization and products/services that may be relevant to them in the near-term.
Promotional Products Remain Effective Methods for Long-Term Visibility
Promotional products are sometimes viewed as dated methods of promoting an organization. Typically, the negative perception stems from organizations ordering bulk quantities of inexpensive products (e.g., pens) for distribution purposes without establishing a clear objective or purpose for doing so. While poorly utilized products serve little purpose beyond creating clutter, properly designed promotional products can continue to increase an organization’s visibility long after the conclusion of a specific promotion, event or client interaction.
The most effective promotional products are those that become a regular component of a user’s daily routines. ForKeeps give the example of a high-quality notebook used on a weekly basis to facilitate meetings among employees, a reusable water bottle kept at the employee’s workstation or a sturdy tote bag used regularly by an employee for commuting purposes all represent examples of how promotional products can contribute to increased visibility. As opposed to the relatively short duration of impact generated by items that are eventually lost or discarded in drawers, etc., products that develop long-term usage habits provide a longer duration of impact for branding.
When evaluating various types of promotional products as viable choices, consider the cost per unit and how the product will ultimately be utilized. Low-cost items that break quickly can damage perceptions of the organization providing them as well as damage the organization’s reputation. Organizations should select suppliers who specialize in designing branded merchandise specifically targeted towards the target audience and who can assist with product selection based upon an understanding of how end-users will utilize the product.
As previously mentioned, it is essential that the product selected supports the organization’s positioning strategy. For example, if an organization markets itself as environmentally sustainable, utilizing products made of non-durable materials (i.e., plastic) would likely detract from its stated values. Similarly, organizations should consider the geographic area(s) where they intend to distribute the products to ensure there are adequate shipping/distribution mechanisms in place.
Additionally, organizations must determine whether distributing the product to all customers will yield sufficient results. Promotional products generally work best when distributed to specific segments of the customer base where they can support a particular commercial initiative. Examples of such initiatives include: welcoming newly acquired customers to their respective organizations/teams; sending products to attendees following conferences/events; recognizing loyalty/rewarding repeat customers; requesting referrals from satisfied customers; and enhancing the image of a sales team following client meetings.
Email Remains One of Most Controllable Channels
Email is sometimes considered an outdated form of communication. Despite its age, however, it provides SMEs with a significant amount of control over their messaging efforts compared to more recent forms of digital communication (e.g., social media).
Organizations do not pay for each message sent via email. Once a list has been created, it can be segmented and tested to see which messages elicit responses. Moreover, unlike social media platforms, email allows businesses to track responses and conversions (enquiries/bookings/sales) associated with each email campaign.
Unfortunately, email is often used in ways similar to mass mailings. By treating email like a digital flyer, an organization will not be able to create engagement from its subscribers.
Effective email campaigns exist primarily due to their ability to connect with customers about something related to a transactional event. Some examples of effective subject lines for email campaigns include:
* Recovering abandoned shopping carts
* Reactivating dormant customers
* Introducing new complementary services/products
* Answering common objections/questions before a purchase is made
Return on Investment from Search Marketing Is Higher When Intent Is Clearly Defined
Search marketing can also generate significant returns on investment. In contrast to social media users who browse online casually and randomly, individuals searching online for a specific product/service/local supplier are typically in the final stages of researching a solution to a problem they’re experiencing. Therefore, both organic search optimization (SEO) and paid search are highly beneficial to SMEs, especially when they solve specific problems.
However, as search activity increases in terms of volume/competition, it becomes increasingly costly. If an organization targets overly broad search terms, it risks burning through its marketing budget while attracting very few interested customers.
Organizations seeking higher ROI from search marketing will typically find success when focusing on searches that reflect real needs/interests. Regional providers typically receive greater benefits from targeting detailed local searches versus competing against broad national terms.
In addition, just like paid search, organizations that publish generic volumes of content rarely produce immediate commercial results. Pages that address real buying questions/differences between alternatives/commonly encountered obstacles will be more attractive to qualified prospects than pages intended solely to draw visitors to a website.
Word-of-Mouth Requires a System Not Just Wishful Thinking
Word-of-mouth is often cited as an SME’s best marketing channel. While word-of-mouth can certainly prove to be one of an organization’s most effective marketing tools, organizations cannot rely on word-of-mouth alone. Rather than hoping that happy customers will mention an organization favorably to others, organizations should implement processes for obtaining referrals from satisfied customers. Such processes might include:
* Asking for introductions after completing projects successfully
* Providing referral links to satisfied customers
* Offering incentives/rewards when referrals are made for qualified prospects
Like most things in life, timing plays an important role in generating referrals. Satisfying customers while they’re dissatisfied/frustrated/waiting for assistance/responding to an unmet expectation could potentially create more harm than good relative to the desired outcome of receiving positive referrals.
Referral requests should occur after the value provided by the product/service has been clearly demonstrated.
Positive testimonials/customer reviews can also play a supporting role in reducing perceived risk for potential buyers — particularly when describing specific outcomes rather than simply expressing general satisfaction with a product/service.
Pay-for-Social Media Must Produce Results Quickly
Pay-for-social-media is another popular method of digital marketing that can work effectively for SMEs. Like paid search, however, paid social media is one of the easier areas for marketers to lose money.
One reason for this is the ease with which paid social media campaigns can be launched. The launch process can create a false sense that social media marketing itself is easy and therefore doesn’t require much strategic planning.
Social media metrics (e.g., number of likes/views/new followers) can appear impressive in reports; however, unless actual revenue is produced as a result of those metrics, they mean nothing.
Pay-for-social-media performs better when a visual element exists (products), when a defined audience exists and when a response is possible quickly (e.g., click-through rates). Additionally, it’s useful for retargeting past site visitors and/or social media users who have interacted with the brand.
Initial budgets for paid social media should be viewed as tests rather than commitments. Marketers should ask themselves three critical questions regarding their objectives:
What am I trying to learn?
Which audience reacts positively?
Is there evidence that those reactions translate into sales?
If the answers are no (the campaign produces impressions but no revenue), increasing the budget rarely addresses the root cause of failure.
Measure Revenue, Not Activity with an SME
Marketing ROI becomes difficult to judge when every channel uses a different definition of success.
The social team reports engagement. The website agency reports traffic. The email platform reports open rates. The promotional product supplier reports units distributed. The sales team reports enquiries. None of those figures is useless, but they do not automatically show whether the marketing created profitable growth.
An SME needs a small number of commercial measures that connect activity to outcomes. These may include cost per qualified lead, conversion rate, average order value, repeat purchase rate and customer acquisition cost.
Promotional products can be harder to measure than digital campaigns, but they should not be exempt from scrutiny. Businesses can use campaign-specific QR codes, landing pages, discount codes or follow-up questions to understand whether an item contributed to enquiries, referrals or repeat orders.
The measurement does not need to be perfect. It does need to be consistent.
A spreadsheet that reliably connects campaigns with enquiries and sales is more useful than an impressive dashboard nobody trusts. The purpose is not to capture every possible interaction. It is to make better decisions about where the next pound should go.
The Best Channel Depends on the Weakest Part of the Journey
There is no universal marketing channel that produces the best ROI for every SME.
A business with strong traffic but weak sales may need better landing pages or clearer pricing. A company with plenty of first-time buyers may need stronger retention. A trusted local provider may benefit from referrals, reviews and well-chosen promotional products, while an unfamiliar online brand may need search content and retargeting.
This is why copying a competitor’s marketing mix can be misleading. The competitor may have a different reputation, margin, sales cycle or customer base.
The best ROI usually comes from fixing the most expensive weakness in the customer journey. Sometimes that means attracting more people. More often than many SMEs expect, it means doing a better job with the attention they already have.
Good marketing is not simply the activity that produces the most visibility. It is the activity that creates measurable, repeatable and profitable customer behavior
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Frequently Asked Questions
What generates the highest ROI for most SMEs?
The highest-ROI activities for most SMEs are those that are part of a functional ecosystem. This includes systems that: 1) attract qualified leads, 2) continuously follow up with those leads and 3) encourage repeat purchases from existing customers.
Why is retaining existing customers often more effective than acquiring new ones?
How should SMEs measure marketing ROI?