The Death Spiral: Failure is NOT a Strategy
This is a tough piece to write because it probably won’t have a happy ending. What prompted this is a decision that one of our client’s made just days ago.
It’s a Glass & Mirror shop down in San Diego that has been struggling for a while. They made some poor marketing decisions in the past, and I fear they just made another one.
Mistake #1: Their original website was built back in 2010, but this isn’t 2010 anymore, and it looks a little dated. About 2 years ago, they contracted with a large, very commercialized company that gave them a separate domain name, and a separate website. THE CLIENT DOESN’T OWN EITHER.
The client pays a monthly fee to essentially “lease” the website and have it optimized for search engines, with a portion of their fee being allocated to running paid advertising on Goggle AdWords.
Although this leased website was built about 2 years ago, it was essentially outdated even back then. In fact, it isn’t even mobile friendly.
The result? Their leased website is preforming slightly better than their original website in the search results, but not good enough to drive meaningful traffic. Also the content on the leased website was so skewed towards appealing to search engines, that it looks silly to actual human beings. Even if it did get traffic, it doesn’t do its primary job of getting visitors to call.
The client shared the contract with me, and there is no indication of how much of their fee is being allocated towards the paid advertising budget. However I do know the TOTAL amount that they are paying, and even if the entire amount is being dedicated to their paid advertising budget, it wouldn’t even be half of what is needed to be effective. It is no doubt a token amount on a few keywords, with this company stuffing the rest of the money in their pockets.
The first mistake? They don’t own the website or…even the domain name, yet they have been paying for years to have it optimized. If they abandon it, someone else will be able to build upon any authority the domain name might have picked up in the past.
The Brightside: The Contract is over and they can do things right
The Downside: The client has no money to do it right
The Solution: Understanding that she no longer has the funds to make the full investment in the infrastructure to build a long-term growth plan, I drafted a strategy to generate leads and sales quickly. We would work on the long-term strategy once we build up her revenue stream. I boiled it down to the essentials:
- A good modern, mobile friendly website that is designed to convert visitors into phone calls.
- A proper paid advertising program to drive targeted traffic to the new website.
Search engine optimization, content marketing and social media management could wait.
She would still have to come up with a monthly budget that was more than what she was currently paying, but based on our experience in the Glass industry, I was very confident that we could right the ship for her and establish a ROI for her pretty quickly. Of course there are no guarantees, but this was a pretty solid plan with very favorable terms for her.
Mistake #2: The Death Spiral
She was excited and impatient, and pushed me to send her the paperwork and get started right away. Cut to the chase…knowing that she was on borrowed time, I instructed my team to push the project to the top of the queue, and we got started right away.
Two days later, she sent a note saying that she was worried about finances and to cancel out the contract. She said that she knows she needs to do this, but she wanted to make some more money first. Thus the problem….
Logically she’s aware of this, but she clings on to the hope that things will change by themselves and go back to the way they used to be. It’s a kind of a “Who Moved my Cheese” moment.
So how does this end? Well I don’t know, it still has to play out. But knowing what I know, I think a simple “not well” will probably sum it up.
How much SHOULD you spend on marketing?
Well, that depends on who you ask. The U.S. Small Business Administration recommends spending 7 to 8 percent of your gross revenue for marketing and advertising if you're doing less than $5 million a year in sales, and your net profit margin (after all expenses) is in the 10% to 12% percent range.
There are of course, a lot of variables, such as how much of a boost you need just to turn a profit. Start-ups and businesses on the brink of a death spiral may have to do some soul searching. One thing for certain, If you keep on doing what you’ve been doing, you’ll keep on getting what you’ve been getting.
So this is the part of the article where I normally insert the obligatory call-to-action like download this, or fill out that. Let’s keep this simple, if you want to talk digital marketing with me, just contact us and I’ll set some time aside for you.