Does marketing work in a small town?

There is a question I am asked quite often on the topic of marketing in a small community. “How many people are there to even advertise to? Will it even work?”

The answer is ABSOLUTELY!

In fact, in some ways, it can actually be more useful. Well, sorta.

If you have a limited amount of red dye, and you need to make a glass of water red, does it help to have more or less water?

It’s the same thing with marketing!

Small businesses often have a limited budget. But they still need to reach market saturation to experience real success. If you live in a smaller town, it takes less money to achieve full market saturation.

If you live in a small town, you have zero reasons not to be known by everyone who might be interested in your business.

That’s the ultimate goal of any marketing campaign, to be top of mind of anyone who might want your services.

So, how do you go about working with a smaller audience? Let’s get into it!

More is More, especially when you are dealing with less.

In a small town, you still have many thousands of people to market to. And many who want to become lifetime customers.

I’m saving a full explanation of this topic for a future post, so subscribe if you want to read more on this concept.

Let’s talk about the Lifetime Value Formula. Or LTV for short. Here’s a helpful article that goes into depth explaining these statistics.

It’s a way to figure out exactly how much each customer is worth to you. In an area with fewer people, you need to calculate realistically what your opportunity is.

To calculate what each customer is worth to your business, use the following equation.

CPV X VPM X 12 X YIA X NR

Seems kinda of complicated, but let’s break it down.

Cost Per Visit (CPV) =
How much a customer spends on a visit or sale.

Visits Per Month (VPM) =
How many times a customer visits your establishment a month.

Referral Regulars (RR) =
New regulars you receive a referral.

New Regulars (NR) =
How many referred friends become a regular.

Years in Area (YIA) =
How long someone stays in a local area.

Now, we have what we need to figure out exactly how much a customer is worth to your business.

Let us calculate this for a restaurant. (Don’t worry, it looks scary, but it’ll be pretty straightforward when we break it down below.)

An average customer spends about $14 on a meal and drink, and a regular comes in at least twice a month. Statistically speaking, an average customer will refer 3 friends a year, one of which will become a new routine. We know from US census data that an average person will stay in an area for roughly 5.2 years.

Considering all the information, we know how much potential revenue in your local community there is to make!

*Just a note to quell the comments and people complaining about this math equation not being exact… nearly nothing in marketing strategy is exact. This formula is a tool that gives you an idea of how much potential business you can claim as your own!

$14 X 2 X 12 Months X 5 Years in Area X 5 NR’s

We calculate this all together, and we find out that every customer we drive into your business is worth a startling $8,400. Really makes you think about how outstanding customer service must be right?

Let’s calculate this potential from the city of Warrensburg, Missouri. A relatively average small town for the US. There is an estimated population of 20,168.

Fifty-eight percent (58%) of American Adults now say they are dining out at least once a week, according to a new Rasmussen Reports national telephone survey. [See Link Here]

If there are 20,168, lets low ball it and say 50% instead of 58% go out to eat at least once a week. That means 11,697 customers are waiting for any restaurant in Warrensburg to claim as a regular, and come in AT LEAST twice a month. (Although if we use the actual data, they could probably get those people in once a week.)

That means, for a restaurant in Warrensburg Missouri if they reach full saturation with their marketing, they have the potential of generating $98,254,800 estimated sales, ON THE LOW SIDE.

So, now let me ask you a question… if in a small city of 20,168 people there are nearly 100 million dollars to be made for a restaurant that makes $14 bucks a plate, how much business is there to be prepared for your business?

I challenge you to take 15 minutes and figure out exactly how much money there is to be made in your community. That will help you focus in on how much growing you can actually do for your business.

Now that you’ve calculated your potential, let me ask you… do you have the cash to invest in marketing?

Is the cost of hiring someone to do it for you, or learning how to do it yourself so high now?

If you spend $12,000 a year to hire our team of consultants plus an advertising budget of $6,000 and you tap into even HALF, the potential revenue we calculated up above, isn’t it worth it?

The ROI on even half that potential revenue is over 2,729,300%.

And if we only accomplish 10% of half of what is possible… you are still looking at an ROI of over 272,930%

It’s hard to believe, exactly how good of an investment *effective* marketing is. In fact, just writing this article, I think we should raise our prices.

I encourage you to do your own calculations and to consider how much you leave on the table. I want you to commit to pushing your business to the next level.

After that, I hope you will decide to call us… but if nothing else at least commit to sharing your product or service with individuals in your area.

For every person who would LOVE to be in touch with your business and benefiting from what you do, and you don’t reach. You are doing them a massive disservice.

Maybe you don’t have the staff or the drive to grow your business more. But I challenge you to commit to the entrepreneurial dream again, not for yourself… but for the people who need what you are offering.

Do it for them, if not for yourself and as always, stay curious!