Guardian (Business Sense supplement), September 2005

Marketing gaffes
By Sue Norris

When Chris Nelson set up his Web company, www.mapsworldwide.com, in 1998, he blew £40,000 on marketing that had no impact on his business whatsoever, despite what he’d considered to be careful planning.

The idea behind the business was sound enough – to provide a Web-based outlet for specialist maps, so that travellers and walkers didn’t have to trek down to Stamford’s on Covent Garden’s Long Acre. With a background in PR, Nelson was confident that he knew the right marketing strategies to suit the customer base, and so embarked on some classic campaigns, designed to drive traffic to the new Web site.

This was at the beginning of the dotcom era, when the Web was seen as just another channel to market. "This suggested you needed to use traditional communications methods to drive traffic to a site," Nelson explains. "So we thought about who our customers were – ie people who fly, sail, walk and travel – and visualised individuals that read publications such as The Great Outdoors and Living France. If we could target these people through focused advertising and writing to them via mailing lists, we were confident they would instantly see the value of our proposition and visit our Web site."

£40,000 later and the company had nothing to show for its marketing spend. Nelson has placed ads across a range of appropriate magazines, offered reader deals, and sponsored content, but the Web traffic didn’t come. "It was a complete and utter failure," he says. "And yet all the publishers’ sales information confirmed that the demographics were right."

So what had gone wrong? "We hadn’t thought about our audience enough," Nelson admits. "We had assumed our audience would use the Web – they’d see the adverts and come to our site, but they didn’t. If we’d been a shop selling maps, this approach would have worked. It turned out that the Web – which we’d seen as a channel to market - was the market."

So Nelson turned his strategy on its head, and began to use Web-based marketing, targeted at Internet users who also happened to have a love of walking/flying/travel.

The difference was staggering. "Once we focused on online advertising and search engine marketing, we saw real results," he says. Whereas, in the first years, the company turned over less than £100,000 a year, today it boasts annual sales of half a million pounds and is now the largest online map business in the UK, with 100,000 customers in 270 countries. The business has also been profitable for the last four years.

And the company’s total budget for traditional marketing? £0. Not only that, but during those four years, the travel industry has been rocked by 9/11 and foot and mouth, not to mention various security scares about buying online. In addition to having reacted swiftly to these crises by switching focus to corporate products such as wall maps, Nelson attributes the company’s enduring prosperity to having found the right means of reaching new customers, which it now does with an annual online marketing budget of £12,000.

The lesson from the experience, Nelson says, is to think carefully about the customers of a new business – "that’s think, not even plan," he emphasises - and not to make any assumptions.

Bob Ward, the founder and MD of Web-based business glassesonspec.co.uk, launched earlier this year, went through a similar learning curve which also left him out of pocket.

Ward, whose background is in IT, identified a niche for supplying cheap prescription spectacles over the Internet, undercutting the vastly inflated prices found on the high street. Discovering that it costs independent optical laboratories just £9 to turn out a complete pair of glasses, Ward lost no time in contacting potential partners to help him get his business off the ground. Just four out of the possible 80-90 labs he approached were willing to meet with him; the others were too concerned about jeopardising their contracts with the high-street opticians.

Funded with his own resources, and with a lab ready to supply the glasses, Ward launched the business in April, just four months after having the idea. The next stage was to market the company.

Ward’s controversial proposition lent itself to some great PR, which secured him coverage in local newspapers and on radio stations. Ward wanted people to know (many didn’t) that they were legally entitled to walk away from an optician with a prescription that could be fulfilled by any outlet of their choice; that they weren’t beholden to the company that performed the eye test. He notes that, in the US, some 50-60% of glasses are bought online.

The best way of spending his limited marketing budget, then, seemed to be to get his message out as broadly as possible, educating the public about their options, then hitting them with the punch line: just how much he could save them (50-70% on the same pair of glasses).

Ward invested £9,500 on a run of 10 radio ads and a further £4,000 on advertising in consumer magazines. Yet, where the PR had generated awareness, and the advertising had possibly added to this, this wasn’t translating into hits on the Web site.

"As a new business, I just assumed I needed to advertise, but I wouldn’t do it again," Ward says. "I had a finite marketing budget and should have spent it more wisely. With radio, you need to hear an ad four or five times before you’ll get a pen ready to write down the details. A run of 10 ads wasn’t enough to get across the message and get people to the site."

If he had the budget back, he’d spend it with Google, he says. "I’d go for the best bang for my buck, and the fastest. I believe search engine marketing is the most targeted advertising possible if your business is very specific, because you’re paying only to be seen by someone who is interested in what you’re selling. Anything else is like distributing leaflets outside Tesco."

Although Ward allocates £26 a day to buying Google Adwords, which he says gives him a good return on investment, a longer term strategy is to gain a high, organic (non-paid) listing with Google, by investing in the quality of his Web site and developing links with reputable, related Web sites (eg those selling sunglasses). He is confident he’ll be graded by Google before the end of the year, thanks to the work he’s put in here, and to the creativity of his site which uses ‘e-fitting’ software to allow customers to ‘try on’ different styles of glasses using a photo of themselves.

With an organic Google ranking, Ward hopes to sell 20 pairs of glasses a day, providing £30,000 a month in revenue. "My vision is that glasses will become such a commodity that consumers will be able to buy several pairs of glasses, in different colours, to go with different outfits or just to give them a change," Ward says.

Of course, not every lesson in marketing is Web-based. Even today, many thousands of UK businesses rely very little on the Internet for their sales - if they have Web sites at all.

7 Wives Natural Bodycare, based in Penzance, Cornwall is one such company. It produces natural soap and sells a wide range of ‘non-compromised’ skincare and beauty products, made from natural oils from around the world. The business has been going nearly seven years, during which time it has made and sold 20 tonnes of soap.

Like Ward of glassesonspec, founder Rick Kilminster is an entrepreneur first, and a marketer second. His diverse background includes several years making PA systems in London in the 70s, for bands including Pink Floyd.

7 Wives sells its products primarily to independent retailers using telemarketing, though it also has a mail order-based direct sales business, and a Web presence (at www.sevenwives.co.uk). The company has seven staff, and turns over just £250,000 a year.

Having a modest budget ("We couldn’t afford an £80,000-a-year rep to travel the country"), Kilminster felt telemarketing was the most cost-effective way of spreading the word about the company to potential resellers. Because the workforce was so small, he outsourced the activity to an external specialist.

This proved a costly mistake. "The agency claimed to have just the database we needed but after a year we’d had very little response, yet had received bills totalling £20,000," Kilminster says. "It became clear that we were just another customer on their books that they could bill every month."

7 Wives learnt the hard way that, in its niche business-to-business environment, dealing with customers was something that had to be managed internally, by people with a genuine passion for the products. Now, the company has added two staff who divide their time between the phone, attending trade shows and meeting customers. It won’t be outsourcing its marketing activities again in a hurry.

Kilminster is also shy of taking advice from so-called marketing experts now, noting that he wasted six months on the road himself when someone persuaded him that the company could not possibly succeed without a travelling sales rep. "I was no good at it," he says.

"My advice to anyone else would be trust your gut instinct, and don’t be led down blind alleys by so-called experts," Kilminster concludes. "While a marketing agency might be experienced in one particular area, they may not know what’s right for your business. Make sure you’re not being put in a sales and marketing pigeonhole."

Box copy:

Don’t make a mess of marketing

Christine Cryne, chief executive of the Chartered Institute of Marketing, says small businesses can learn a lot from the marketing gaffes made by big companies that ought to have more sense

"Marketing has been proven to make more difference to bottom line success than any other activity, but even larger companies often don't give marketing the attention it deserves," she says.

One mistake is not taking marketing seriously enough. A survey carried out by the Chartered Institute of Marketing (CIM) revealed that just 12% had a marketer on their main board, while 72% had no marketing professionals on their main board or senior management team. Just 22% of CEOs had a marketing background - compared with 27% who came from operations and 40% whose area of expertise was finance.

Some sound advice:

• Do your homework
• Don’t underestimate local competition
• Let others in to share your market if the alternative is to lose it
• Respond quickly to customer complaints
• Keep an eye on your critics
• Test the water - target one small region before launching a national service, or focus one type of customer before attempting to appeal to a wider base
• If you’re ahead of your time and the market might not be ready for your product, think about PR first and focus on educating before selling
• Choose the right blend of promotional tools such as advertising, direct mail or telesales. If one technique does not work, try a different tactic
• Measure the results so that you know your marketing budget is being spent wisely
• If you employ a marketing professional make sure they are properly qualified
• If you can't afford to take on professional help, consider taking a part-time marketing course

For more practical advice, and details of marketing courses for small businesses, see the CIM Web site at www.cim.co.uk/sme