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Green Startups Focusing Their Marketing Dollars: Think “When,” Not “Where”

Scott Cooney | Tuesday March 8th, 2011 | 0 Comments

Increasing traffic and readership on 3P’s Startup Friday tells of a larger trend of increasing interest in green entrepreneurship. In a recent interview with Jeffrey Hollender on the subject, he said, “There’s never been a better time to start a green business.” The popularity of The Hub’s “Hub Ventures” program and increasing interest in the green entrepreneurship workshops we offer at GreenBusinessOwner.com should come as no surprise–in a down economy, the talent pool of workers often exceeds the open positions at existing companies, thus producing a surplus of talent. In addition, interest in sustainability is at an all-time high and looks to continue to grow as more and more mainstream businesses look to incorporate it into their core missions.

One challenge that almost always faces startups is marketing…and the money to do enough of it. Many green startup entreprenenurs I’ve worked with for the last 10 years have confided that they feel they are literally throwing their marketing dollars in the trash. Marketers often advise new business clients to target particular places or niche groups with their limited ad dollars. In the new age of social media and a coming transparency economy, perhaps focusing on “when” in the purchasing decision framework to use their marketing dollars might be more prudent, according to David Edelman, McKinsey and Company’s Global Digital Marketing Strategy coleader. Social media, he argues, allows even companies with limited budgets to do just that.

The key, he says, is not to focus marketing dollars on the competitive timeframe, when customers are choosing between multiple brands. This is more the traditional viewpoint in marketing, which is why Point of Sale marketing has traditionally been very popular with companies. With the new era of social media however, when most customers get much of their product information from people they trust (other customers who are like them), spending money wisely may help you build a brand loyalty that many other companies are missing out on. Edelman conducted an analysis of firms he worked with and found that 70-90% of their advertising budgets, on average, went to promotions at the stages he called “Consider” and “Buy.”

If, instead, companies were to use more of their marketing dollars post-sale, they would get a leg up the next time that person goes to the store. Consider it–isn’t that what brand loyalty is all about? One of the basics of marketing is that new customer acquisition costs far more than keeping current customers. So why the discrepancy in ad spending?

The reason, according to Edelman, is that historically, it was harder to reach those customers post-sale. Nowadays with social media, the ways to do this are ample, inexpensive, and, if done right, highly rewarding to both customer and company. Focusing marketing on existing customers and giving them incentives to bring their peers to you can backfire if it seems pushy, but consider Groupon’s model of friends suggesting deals to other friends. After all, people know what their friends like, whether it’s a gym membership, a yoga class, or an organic smoothie. Getting that referral means everything to the company, and getting customers to act as ambassadors creates engagement.

One of the benefits of working in the green economy is that green consumers want to be loyal to your brand. Utilize this technique of following up with your customers post-sale, providing them with terrific incentives to stay your customer, and you will build what Edelman calls the “Loyalty Loop,” wherein the customer completely stops evaluating and considering other brands because they are so happy with yours.

Scott Cooney is the author of Build a Green Small Business (McGraw-Hill), and covers green business strategy on GreenBusinessOwner.com. Sign up here to receive regular green entrepreneurship strategies and announcements of free web classes through GreenBusinessOwner.

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