I was at the airport yesterday, with an hour or so available plus another hour for the flight back to Oakland. I decided to pick up a business book. These are almost universally disappointing, with only a couple that have made real impressions on me (E-Myth, 4-Hour Work Week). My options came down to the ethereal and the practical. The ethereal book was by Peter Drucker and discussed how my innovative business could survive in a post-capitalist world. The practical book was called Alpha Dogs, how a handful of small businesses thought differently to achieve success. My brain likes the Drucker type books while the practical books have instant application. It's like the difference between learning how to make a peanut butter and jelly sandwich and learning the theory of why the body prefers protein derived from nuts and simple sugars. Of course you want to read the second book, but what value does it have?
Alpha Dogs turns out to be written by an Inc. Magazine writer. It's basically a really good article stretched out into a book. It's no E-Myth, but it had some interesting ideas. The one that had me thinking non-stop since reading it was about marketing. Marketing is a large expense for a small business. It's an expense that's self-imposed and as the business grows, the expense grows with it. The general consensus is that it should be about 3% of gross income, so for most game stores it's somewhere between $7,000-14,000 each year. Well, actually, most game stores don't do any advertising, but that's another post about business competency. For my business, we're approaching the top end of that range and honestly, there is very little perceived return on investment. We primarily do yellow pages ads and commercials on local cable, both of which we've done for the last three years. Everyone knows advertising is important, everybody does it, but very few people feel like they're getting their moneys worth. Sometimes I look at that number and think, how much better off would I be if I just put that money in my pocket?
You can't dump marketing, but you can change the focus. One company in Alpha Dogs only did cause-based advertising. You might focus on charity events, well publicized donations to non-profits, or other "indirect" marketing efforts that don't involve ads and commercials. One company turned inward. Imagine if we spend all that money on our existing customers, providing free snacks during organized play, generous prize support, or even a free coffee bar. The theory for both of these approaches is you create a situation where word of mouth does the actual advertising for you, while spending money on those who support you. My advertising contracts are up in October, so I have some time to think more about this.