The last thing you should do is advertise…

The purpose of advertising is to inform prospective customers of your existence, and to communicate the value of your product or service. So how can you argue with doing it? (Actually, I’m not saying don’t advertise; I’m just saying there are a few other things you should think about first.)

1) Who is your prospective customer? No. Really. Who is it? Most companies define their target much too loosely. They use something like “boys 13-18” or “urban women.” Your target customer can be profiled much more exactly. This shouldn’t be guesswork. Unless you are a start-up business, you already have customers. To find out who your target is, you can simply profile the group that has already bought your product or service. Don’t have a lot of information about these people? Not a problem. If you can get a name and address or telephone number, data aggregators can usually sell you extensive information about them (often for pennies per person).

And you don’t need to get data on all your customers—just a representative sample. That’s usually less than a thousand people. Analysis of the data can be done on either an internal or outsourced basis. I guarantee you’re going to find some surprises when you do this. And when you are ready to advertise, I also guarantee this more precise targeting is going to make your advertising much more effective.

By the way, if you’re working on a start-up business and don’t have any customers yet, give me a call, and I’ll tell you how to develop a profile of the people who will become your best customers.

2) Why should someone buy your product? Who is your competition, and what are you providing that they are not? Unless you are just trying to out-shout your competition—which is an awfully expensive proposition—you should have a clearly understandable competitive advantage. If you don’t, you should be spending your money on developing an advantage instead of on advertising. Advertising creates leads, but it is superior products that turn leads into sales.

3) How do you treat your prospects and customers? Do people enjoy doing business with you? Are your sales associates knowledgeable and professional? Do you have an informative, comprehensive website? Are telephones quickly, politely, and competently answered? Do you reply promptly to e-mails and letters? Until you can answer yes to these questions, you should be spending your money on customer service rather than advertising. It is very expensive to create a warm lead using advertising, and that expense is often wasted if your organization is poor at converting that lead into a satisfied customer.

4) Have you explored less expensive alternatives to traditional advertising? Should you be blogging on the internet? Are there events you should be sponsoring? Press releases you should be distributing? Contests you should be holding? Cross-promotions you should be doing? In-store merchandising you should put up? It’s easy to substitute advertising for creativity. But it is also very expensive.

You need to figure out who and what influences your target customer. A recent survey ranked media advertising dead last in influencing purchasing decisions, behind personal anecdotes on the internet, news stories, professional assessments, and (strongest of all) word-of-mouth from someone you know personally (ie: referrals). Some big companies today are working on identifying what specific sources influence target segments, so that they can efficiently “influence the influencers” rather than trying to reach each individual prospect.Advertising is a wonderful tool. But like any tool, it is most effective when used in the right way at the right time. It is not a substitute for careful targeting, a competitive advantage, good customer service, or favorable word-of-mouth. So advertise, by all means-- after you have these other elements in place.