You don't need a big marketing budget to quickly attract new customers. That's according to Dan Laufer, CEO of the rental review website RentLingo, and he would know. He has seen his company grow from 100,000 unique visitors in 2013 to 150,000 a month by the end of 2014, using promotional methods that were low-cost or free. The site generated 85,000 apartment inquiries last year, up from 5,000 in 2013.
How can your company create that kind of rapid growth without a big marketing investment? Here are Laufer's tips:
1. Partner with other businesses, even if they seem like the competition.
"Entrepreneurs often get too caught up in building their own fiefdoms," he says. For RentLingo, partnering with others was a key step toward profitability. When site visitors inquire about a property, RentLingo sends those leads to one of its partners such as Move, Apartment Finder, or Trulia. In return, RentLingo gets part of the lead fee that property owners pay. It also places RentLingo at one remove from those property owners, reducing the danger of conflicts of interest since the site promises unbiased reviews. "If you can view your competitors as collaborators, and partner with them to sell your product, you will automatically have access to a much wider customer base," Laufer says. "It's a win-win."
In the same way, he says, small e-commerce sites should consider selling through Amazon or other large marketplaces. "Obviously, most would rather be a destination site of their own, but going where your customers already are wildly expands your reach."
2. Understand the lifetime value and acquisition cost of each customer.
"It's essential that your average customer lifetime value is greater than the cost of customer acquisition," Laufer says. "This may seem like basic math, but often entrepreneurs get too caught up in building up their business as a whole, and they don't pay enough attention to each individual customer." Thus, he says, if you own a coffee shop and you know that bringing in one new customer will generate at least $1,000 of revenue in a year, it's worth it to buy a $200 an ad that will bring that customer through your door.
Tracking this data may seem like a challenge for a small business, but it really isn't, he adds. Online businesses can use Google Analytics or similar tools to track these figures, and even bricks and mortar companies now have access to point-of-sale software that provides very detailed data. "So there's no excuse for not having a good sense of your customer lifetime value or acquisition cost."
3. Use paid marketing, but very carefully.
"Paid marketing is a siren song for many entrepreneurs," Laufer warns. "They see it as a quick and easy tool for acquiring more customers. However, if you don't carefully measure your results, you can easily be lured down a rabbit hole and quickly exceed your marketing budget."
When paid marketing is effective, it can rapidly accelerate customer growth, he adds. But it's easy to get it wrong. One common mistake is to assume that results from one channel will carry over to another. For instance, customers who find you through a blog might buy 10 percent of the time, whereas customers who find you through an ad might buy 1 percent of the time. The solution? "Start small, make sure the economics work, and only then scale."
4. Get on the map.
Laufer means this in the literal sense. "Maps on smartphones are becoming the starting search points for many consumers," he says. "Putting yourself on the map is free, and many entrepreneurs forget this simple step." With Android and iOS dominating the smartphone market, at a minimum make sure you show up on Google Maps and Yelp (which Apple uses), he says.
Even if your business does not have a physical location for customers to visit, you should still be findable with search, he adds. "Every business should have at least a minimum presence on Google. If you're not easily searchable, it's hard for customers to find you."
5. Ask for referrals, and offer incentives.
"Don't be too shy to ask your existing customers for reviews," Laufer says. "Most of them will be happy to do so, especially if you provide incentives." Also, ask your existing customers to refer their friends and offer a financial incentive for both. Another option is to offer a piece of exclusive schwag such as a hoodie. "Then your most passionate customers aren't just referring friends but become walking billboards too," Laufer says. As a bonus, he adds, customers who come in through referral tend to be the most loyal of all new customers.
6. Go where your customers are.
This makes sense in the physical world, but perhaps even more so in the virtual world. "Engage with bloggers in your space," Laufer advises. When you get mentioned by bloggers who reach your target audience, the mention feels more natural and is more likely to be effective.
7. Don't neglect your existing customers.
The cheapest way to make a sale is to sell to a customer you already have. So make sure your customers hear from you on a regular basis. "It's a fine balance between informing and annoying, but your customers in many cases do want to hear from you," Laufer says. Sending interesting information and/or valuable promotions is a great way to stay top-of-mind with your existing customer base. It can help bring in new customers, as well, he notes. "The more engaged your existing customers are, the more likely they are to refer a friend."