Q: I run a small business. It’s a spa that specializes in Thai massage. I have two branches now. Cash flow and business were good at the beginning; but now there’s a lot more competition, making it harder to earn money. My competition and I spend money on flyers, some print advertising and even radio ex-deals. My location is commercial so I also rely on people walking in to get a massage or some other spa service.

I am sometimes able to get my customers’ mobile numbers on our guest book and I occasionally send a text blast. But I don’t know if I should keep on doing this since I’m afraid of overdoing it. My friends say that I should try e-mail marketing (although I surf the net and use e-mail I don’t know the right way to go about doing e-mail marketing). Another friend says that I should buy CRM (Customer Relationship Marketing) software that will enable me to communicate better with my customers and keep track of them (start a database, he said) so that I know what to offer each customer based on the services he previously bought, etc etc.

But I told him that I am more of a creative person and I don’t have a partner or staff member who is into IT or anything like that. The most I can do is work on Microsoft Office.

I’m also afraid of the cost of software and database.

I need help! I’m interested in doing e-mail marketing to my customers and sending health newsletters related to our spa services, but I don’t know where to start.

Getting started

How do I get started? I don’t know if I should also get into the customer database thing—it sounds so complicated. I need your advice, please! ~ P.K.

A: Let’s start with the basics of business and marketing. Then we’ll answer your question about how to keep a database of customers and the purpose of investing in this important first step.

Then, we’ll answer your question on how to start sending an e-mail newsletter and special offer of services to your customers. Then we’ll also do a column or two on the other smart ways to do digital marketing—SMS blasts, Internet and social network marketing (Facebook, Twitter, Multiply, blogs, etc.)

Okay, so let’s start!

Test and measure

The whole point of business and marketing is acquiring (market share) and keeping customers (wallet share).

Business is just like a game, so you need to keep score.

In pro baseball or basketball, the GM, coach and coaching staff of the team keep stats to help them make decisions on which player to use and when. In simplistic terms, the better the batting percentage of a baseball player, the more he is used during offense. The better the shooting percentage of a basketball player, the more he is used in a game. Of course, there are other factors and other stats (rebounding, blocks, steals, assists, assists to turnover ratio, etc.) but you get the idea.

The managers, i.e. coaching staff, keep score and know the stats to help them make offensive and defensive decisions.

In business, you need to know the stats of your “players” or offensive weapons.

In this case, we’re talking about keeping track and measuring how your advertising is doing. Do you know, for example, how your print ads and flyers have done? What are the stats on these weapons? When you placed a print ad in the local paper or magazine, were you able to track and measure the following?:

a. Total number of inquiries or calls generated by the specific ad placement.

b. Number of inquiries converted into customers or sales (or sales conversion ratio)

c. Total revenue generated

d. Customer acquisition cost

Let’s say you placed a black-and-white print ad on a Sunday with your telephone number (mobile and landline) and e-mail address with a special offer for anyone who responded within the next five days. (You and your staff kept a journal and tracked the number of people who called, texted or e-mailed regarding your spa’s special offer. You do this by simply asking everyone who comes in the spa this question: “Ma’m/Sir, how did you find out about our special offer?” and then you tally the responses.)

The total number of inquirers or leads over a period of three days was 45 people.

You were able to get the names and captured the contact information of those who inquired.

This is important so that you could determine the conversion rate of those who eventually bought into your offer and became your customers. So out of the 45 leads, you determine that 10 became your customers. That’s about a 20-percent conversion rate. Not bad … Now, you were able to track how much each of these 10 customers spent in your spa and determined that they spent a total of say, P11,000 or an average of P1,100 (or P11,000 / 10). You also discovered that the average was high because a couple of them got the full treatment—body scrub, facial, massage, etc. Anyway, that’s information that you tuck into your database (which we’ll talk about later on). For now, you get your calculator again and compute how much it cost you to acquire those 10 new customers.

So let’s say that you paid P7,000 for the small print ad you placed in the publication. That makes your customer acquisition cost at P700 per customer.

Advertising weapon

Now you have the beginning of your game stats and you can start talking to yourself to literally figure out things:

“For every ad I place in this publication, I get about 45 inquiries, 20 percent of them are converted into customers—or about 10 new customers, and these 10 customers spend a total of P11,000 in my spa or P1,100 per visit.”

“The ad cost me P7,000 or P700 per customer. Meanwhile, the cost of the spa service is about 40 percent or P440 per customer.”

So the question is, dear reader, after making your computations, should P.K. continue to use this print advertising “weapon” to acquire new customers?

Let us know your answers via e-mail or text and we’ll continue answering P.K.’s questions with this special series for SMEs next week.

Send your answers, comments or questions to marketingrx@pldtdsl.net! The Junior MarketingRx-er wishes to greet the Senior MarketingRx-er a very happy birthday tomorrow, July 4.