The effectiveness of marketing in small communities is a topic that often sparks curiosity. A common query I encounter is, “With a limited audience, is marketing genuinely effective?” The unequivocal answer is a resounding yes!
The Advantage of a Smaller Market Contrary to popular belief, marketing in a smaller town can be more advantageous. Let’s use an analogy: if you need to color water red with a limited amount of dye, would you prefer a full bathtub or a glass of water? Similarly, small businesses usually operate on tight budgets but need market saturation for success. In a small town, achieving this saturation is both feasible and more affordable.
Understanding Your Audience Small towns still encompass thousands of potential lifelong customers. But how do you effectively engage a smaller audience? The key lies in understanding and maximizing the Lifetime Value (LTV) of each customer.
Breaking Down the Lifetime Value Formula To gauge the worth of each customer, consider this formula: CPV (Cost Per Visit) x VPM (Visits Per Month) x 12 (Months) x YIA (Years in Area) x NR (New Regulars). This may seem complex, but let’s simplify it with an example:
- Cost Per Visit (CPV): Average spending per customer visit or sale.
- Visits Per Month (VPM): Frequency of visits by a customer each month.
- Years in Area (YIA): Average duration a person stays in the locality.
- New Regulars (NR): Number of new regular customers from referrals.
Case Study: A Local Restaurant Consider a restaurant where a typical customer spends $14 per visit and visits twice a month. Statistically, each customer refers to about three friends a year, with one becoming a regular. Based on census data, the average residency in an area is about 5.2 years. This calculation demonstrates the substantial revenue potential within a local community.
The Potential in Numbers Let’s apply this to Warrensburg, Missouri, which has a population of 20,168. Assuming 50% of adults dine out weekly, that’s 11,697 potential regular customers. Even at a conservative estimate, this indicates a potential of nearly $100 million in revenue for a restaurant to achieve full market penetration.
Reflection and Call to Action So, what does this mean for your business in a small town? I encourage you to take 15 minutes to calculate your potential revenue. This exercise will clarify your growth potential and focus your marketing efforts.
Investing in Marketing: Is It Worth It? Consider the investment in marketing. If spending $18,000 annually on marketing and advertising taps into even half of this potential, the return on investment is staggering.
Conclusion: Embrace the Opportunity Effective marketing is not just an expenditure; it’s an investment with exponential returns. For businesses in small towns, the opportunity is ripe for the taking. So, take up the challenge. Rekindle your entrepreneurial spirit, not just for profit, but for the people who need what you offer. Remember, every unengaged potential customer is a missed opportunity to make a difference.
Final Thoughts Commit to sharing your product or service with your community. Embrace the potential, and always stay curious about the possibilities that lie in effective marketing.