Coworkers talking about marketing strategies for business.

Marketing Solutions for Your Business

Updated January 1, 1 . AmFam Team

Ready to step up your marketing game? To help you craft a winning strategy, we asked experts to answer small business owners’ top marketing questions. See how their tips can motivate you to review and update your current marketing plan, set new goals and achieve business success next year.

Your top small business questions answered.

Ready to step up your marketing game? To help you craft a winning strategy, we asked experts to answer small business owners’ top marketing questions. See how their tips can motivate you to review and update your current marketing plan, set new goals and achieve business success next year.

Matt Heinz

Strategist, president of Heinz Marketing Inc., Seattle. Follow him on Twitter @HeinzMarketing.

Q: I am constantly getting phone calls from companies telling me that they can boost my online business. As a small business, every dime counts. Are there really marketing gurus that can help small businesses? —Gail Hawkins; Cultural Interiors; 10 years in business; Los Angeles

A: It can be hard to differentiate the real experts from the charlatans, for sure. I work only with vendors who not only take the time to understand my business, but focus on business and revenue metrics instead of just marketing metrics. For example, if someone tells me they’ll get me lots of traffic but fails to correlate that traffic to qualified prospects and new sales opportunities, I bail. If they pitch me on a solution without understanding my objectives, I’m done. Raise your standards, stand up for your objectives, [and] expect more from your vendors!

Q: How do I measure the return on investment of a marketing campaign when there can be so many touch points before a customer converts? — Kani Ayubu; The Black Art Depot; 11 years in business; Durham, North Carolina

A: This, my friend, is the critical challenge for modern marketers. There is no perfect attribution solution that I’ve seen yet that works in all cases. There are increasingly a number of solutions that get partially there  Bizible (Opens in a new tab), BrightFunnel (Opens in a new tab), Full Circle Insights (Opens in a new tab)  but I still believe intent is more important than reporting perfection. How well do you understand your target personas? Their buying journey? How precisely are you mapping content and offers to stages of that buying journey to move them closer to a sale? Execute more precisely with these answers and I bet you’ll start seeing lifts in much of your marketing.

Andrew Foxwell

Marketing expert, founder of Madison, Wisconsin-based social media firm Foxwell Digital. Follow him on Twitter @andrewfoxwell.

Q: What is the best way to purchase Facebook ads for my business when customers can only purchase in grocery stores and not on my website? Do I still want to attract them to my website or do I want to target potential customers that live around and shop in the grocery retailer’s location? Junita L. Flowers; Favorable Treats (Opens in a new tab); 10 years in business; Minneapolis

A: There is a diverse suite of Facebook advertising options to help grow your business. Depending on the creative content you already have (i.e., photos, videos, storytelling, etc.), the first thing I’d do is promote a short, 30-second video about your business to the zip codes surrounding each grocery retailer’s location. To deepen the ad’s impact even more, you can then layer in your preferred demographic information (age, gender, etc.) along with interest targets (topics Facebook users have said they’re interested in, pages they like, topics they discuss in posts, etc.). This additional layering would allow you to show the video ad to your most relevant potential customers.

Sending users directly to your website is another helpful step. If you feel confident that your website looks attractive on mobile devices and could help someone understand your products quickly, then sending Facebook users to your website to learn more would make a lot of sense. For this option, simply create a custom audience from viewers that have watched at least 50 percent of your video via the Facebook Custom Audiences (Opens in a new tab) tool and then launch an ad to send those people directly to your website to learn more.

Q: What is the most effective way to warm up cold sales prospects using social media? Dr. Tova J. Davis; Northstar Educational Consulting Group, LLC (Opens in a new tab); six years in business; Atlanta

A: If you already have a list of email addresses of previous leads, then creating a look-alike audience from that original list would be a fantastic way to start finding more qualified people who look and behave like your previous leads or current customers. Essentially, a Facebook look-alike audience is modeled on 2,000 similarity factors (online purchasing behaviors, page likes, topic interests, etc.) to help businesses find more customers who have similar habits to their most relevant audiences.

Right now, a Facebook video is a very effective way to warm up cold sales prospects. It captures their attention and is “thumb stopping” on mobile devices. Video aside, it’s important to remember that the best route on social media is still using all the different types of ads that Facebook and Instagram offer and telling a comprehensive, cohesive, compelling story over time. Don’t take cold traffic and send them directly to your pricing page, for example. Use ads to help users understand who you are first, what makes you and your brand valuable, and what makes your services unique.

Juntae DeLane

Digital branding evangelist and founder of the Digital Branding Institute in Los Angeles. Follow him on Twitter @JuntaeDeLane.

Q: I’ve been working on growing my mailing list. How do I keep my subscribers engaged? What can I do to make sure they see my email in their inboxes and want to open it? What is a good open rate? Kalyn Johnson Chandler; Effie’s Paper: Stationery & Whatnot (Opens in a new tab); six years in business; New York

A: Send [emails] from a real person who recipients can reply to. Give your readers a preview of what’s inside and incentive to open by using an attention-grabbing pre-header.

You also want to personalize emails to improve click-through and conversion rates. Ultimately, study the behaviors of your recipients. What time of day do they usually open your emails? What links are they clicking on? What are they interested in? Open rates differ based on your industry. If you’re getting more than a 10 percent open rate, you’re performing well.

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    Start with the “One Percent Rule”

    Answer a simple question: Will your monthly rent for the space equal at least one percent of the purchase price? If your answer is yes, then your place may be able to turn a profit in the years ahead. Congrats, you’re off to a good start. Be sure that the rental’s priced competitively for spaces of similar design. Here are few other factors to consider:

    Understand the formula

    If the total purchase price of the property is $200,000, rent should be no less than $2,000 per month or one percent of the total cost. Likewise, a $600,000 purchase price for a multi-unit rental property should meet or exceed $6,000 per month in total monthly rent earnings.

    Get the purchase price right

    When factoring in the purchase price, remember to include closing costs, property taxes and insurance. One way to better estimate these costs is to use an online closing costs calculator which can approximate appraisal fees, home inspection fees, application fees, prepaid interest among a host of other out-of-pocket expenses that can up your purchase price, sometimes by thousands.

    Factor in repair costs now

    Because real estate investing as a landlord requires the space to be “habitable” upon tenant occupancy, you may need to make certain repairs or upgrades before renting the property. As a result, you’ll want to add the total cost of these repairs into the purchase price.

    Consider the “Class” of the Neighborhood

    Neighborhood classifications help buyers understand the potential return on investment in a given area. If you’re new to being a landlord, you’ve got to pay close attention to what the neighborhood’s telling you.

    One good way to check out an area — specifically if it’s an investment that requires some traveling — is to use Google map’s street view. Is trash left out on the front lawn? Do neighbors maintain their property? What can the cars parked on the street tell you about the demographic? Here are details on the four distinct neighborhood classes real estate agents use to classify a region:

    Class A neighborhoods

    High income neighborhoods, combined with a home that is move-in ready will usually get an A class rating. Because homes are expensive in these neighborhoods, and their higher than average tax burden, real estate investors usually won’t buy a home there because the one percent rule fails the test. Tenants in these areas tend to be very reliable, high-quality renters.

    Class B neighborhoods

    Typically populated by those earning a moderate-to-high income, B class neighborhoods are frequently considered a good investment for landlords and fertile ground for tenants seeking rentals. Purchasing “as is” properties that can be cheaply updated and rented above the one percent factor is typically possible here with minimal risk. These areas will usually experience increased turnover and vacancy rates.

    Class C neighborhoods

    Because the risk is a little higher in neighborhoods that land in the C class category, the opportunity to see a high rate of return on fixer-upper places is good if you buy a For Sale by Owner property, or one not listed on the MLS (multi-listing service for real estate sales). Populated with blue collar workers with relatively low-to-average income, C class areas typically have higher crime rates and under-performing schools. Landlords should expect less-than-optimal tenants and periods of vacancy.

    Class D neighborhoods

    Areas riddled with crime, properties damaged upon a tenant’s exit and high costs for property upkeep can be anticipated in D class neighborhoods. Buyers usually consider these types of purchases high risk. It should be noted that many property management companies are reluctant to accept properties to service in these areas because the risks associated with the area. Investors tend to seek properties in more stable neighborhoods.

    Use the Capitalization Rate as a Predictor of Value

    Another key way of understanding the rate of return on an investment is the capitalization rate or “cap rate” for short.

    What is a cap rate?

    A cap rate determines a profit ratio that a property can generate. It’s best used as a quick way to compare investment opportunities to determine which one is the better value. Start by dividing the total of one year’s rent by the current market value of the home which should include costs and upgrades required to get the space habitable — you can’t rent the place if it’s not livable, right? The resulting percentage is your cap rate. The higher the rate, the better your annual profit margin.

    How to Calculate the Cap Rate for an Investment Property

    Although the cap rate’s a useful tool to quickly analyze the relative value of comparable real estate opportunities, it’s used as a rough guide to qualify properties for consideration, given the state of today’s current market climate. First, estimate your property’s overall purchase price:

    Figure the acquisition value

    Simply put, this is the total purchase price. It should include all upgrade costs, closing costs, taxes, business insurance, fees, points, etc. Let’s assume a property you’re considering has a total purchase value of $200,000.

    Calculate one year’s rent

    If you’re collecting $2,000 per month, you’ll have twelve payments at the end of the year, or $24,000. This figure is your gross annual income.

    Account for half a month’s vacancy

    Because turnover typically requires some painting and repairs, it’s fair to consider that half a percent (two weeks’ worth of rent) of your total annual income will be deducted to cover the mortgage payments. Assume that your new tenant will cover the remaining pro-rated rent for the other half of that month. Once the vacancy amount is deducted, the result is your gross operating income.

    • Gross annual rental income: $24,000
    • Less the cost of vacancy: -$1,000
    • Gross operating income: $23,000

    Factor in operational costs

    These costs will include money required to keep the property habitable, like paying for trash collection, making repairs, fees from property management, and landlord insurance. Let’s put that cost under fifty percent of the gross operating income, or $9,300. Some years it will be more, some less.

    • Gross operating income: $23,000
    • Less operating costs: $9,300
    • Net operating income (NOI): $13,700

    Divide the NOI by the total value of the property:

    ---------------------  =  0.0685 or 6.85 % - That's your cap rate.

    The capitalization rate for this investment is 6.85 percent annually. If another property under consideration returns a higher cap rate like 8.23 percent for instance, you may want to explore opportunity with the higher annual yield in order to maximize your profit potential.

    What is considered a good cap rate?

    Generally, a cap rate between 8% and 12% is considered good. However, an optimal cap rate is really going to depend on several factors including location, risk and current rental income. For example, in high-demand like big cities, a cap rate of 4% may be considered good.

    Reach Out to Your Agent Today

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    This article is for informational purposes only and includes information widely available through different sources.

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