by John Eberhard

I was talking to a management consultant this past week and he said something interesting that got me thinking. He said that he had observed that when times get tough economically, most small to medium sized businesses (and some big ones) will stop promoting for new business, and instead will fall back to the position of just promoting to their existing customers.

I realized he was right and that I had observed the very same phenomenon. Times get tough, so Mr. Business Owner stops placing ads or doing pay per click advertising or sending out direct mail to raw public, and instead falls back to either doing no promotion at all, or at most promoting to past customers, with newsletters, email, etc.

Why does Mr. Business Owner do this? It’s simple. Promoting to people who have never done business with you is the most expensive type of promotion. It is much more cost effective to promote to current or past customers, because they already know you and have experience dealing with your company, and it is more likely to give a greater return on investment than raw public promotion.

So we should all do that, right? Wrong! The problem with the tactic of cutting out your raw public promotion and promoting only to past customers is that there is a limit to how much repeat business you can coax out of your customer list. If you do this, you will certainly stop expanding, and will at best stay the same and more likely start to shrink your business.

The thing with any business is that you have to put the majority of your promotional efforts and budget towards closing new business. You have to aggressively promote for and close new customers. If you don’t do that, because of attrition and competitors, you will sooner or later see business start to fall off. And then, due to decreased income, it is harder to regain the former position.

In the current economic climate, I have seen a number of companies cut back on their raw public promotion or cut it out altogether. This is a big mistake. Now of course I understand that cash is tight for many companies and continuing to promote in that type of environment is tough. My advice is to find ways to continue promoting to raw public for new customers, even if you have to go for cheaper types of promotion.

I myself have dramatically increased my promotion to both raw public and to existing customers during the past year.

Pay per click advertising is an excellent option in these times, although it may take a little longer to get the campaign working than it did a year ago. It’s important to work with a consultant who knows what he’s doing, and to be creative and thoughtful with your ads, landing pages, offers and keywords. And after the campaign’s up and running, monitor it carefully on a weekly basis. Our pay per click clients who have continued through this period are doing quite well with this medium.

Other new public promotional efforts that you should be doing now include things like advertising, direct mail, press releases, blogs, and article marketing. You should also be doing search engine optimization for your site, social media marketing, like having a presence on Facebook and Twitter. And if your web site is lacking, you should get a web upgrade to make sure the site presents your products or services in the best way, and is set up to take the best advantage of traffic.

And we do it all. We are now also doing print design, printing and mailhousing. We’ll take care of all your promotional needs.