“We have to charge more to pay for all that advertising . . .”

yikes. There’s a heated discussion going on within my NextDoor community about plumbers. In San Diego County, there are a few plumbers that seem to do a lot of television advertising.

There’s the one with the kid that does the talking . . . there are the two guys in a truck making fools of themselves . . . there’s the female-owned company  . . . and maybe a few more.

On NextDoor, my neighbors have seemingly tried them all — with very sad results. The story is always the same: they were quoted what seemed like an exorbitant price for a job. When the neighbor asked the service person why the price was so high, the answer universally was:

“We have to charge more to pay for all of that advertising.”

I wonder if the company owners who are doing all of that advertising — with the goal of bringing in new customers — would be as horrified as I was to hear that phrase.

That is more than sad on so many levels . . .

Advertising as an Expense is an Outdated Concept. Advertising Should be an Investment in Driving New Profitable Customers

As a marketer, I want to run ads that drive enough new business to at least cover the cost of those ads (breakeven) and create new customers. (But ideally, I’d like that new business to be profitable.)

As a marketer, I want everyone in the client company to understand how to properly respond when a client thinks a price quote is too high — so they can maximize the value of every client who calls or books an appointment.

Everyone on your customer-facing team needs to understand that advertising is trying to build business for the company — and keep their paychecks coming.

If price is a key objection, it needs to be addressed on your website — and every customer-facing team member needs to know how to address the objection in person or over the phone.  Is that the case in your company?

I wonder if these companies review the cost of advertising each month compared to results?  Do you?

• What is the cost per new customer?  ($total advertising cost / # of new customers)  If I spent $10,000 and got 100 new customers, $10,000/100 = $100.
• Compared to the profit per job, can you afford to bring in new customers at $100 each?
• How many additional jobs does the average customer do with you in the average year? Maybe those additional jobs make it profitable to bring in a customer at $100 each.

It may be too much to ask of the average small service business. But they’ve got to change the responses of their customer-facing employees. When you sell services, you have to sell the expertise of those delivering the service. Why not:

• Communicate the value of the work they propose to do. Explain why the job is so extensive, the steps you’re going to take, etc. Maybe talk about shortcuts others might take that you don’t.
• Mention the unique benefits you include for your customers. If you check things that others might not, mention  “we’re more thorough to ensure we identify the entire problem.”
• Mention any special training your team might have. Maybe your team is specially-trained to handle this extensive job — or to take steps that help prevent future problems.
• Mention the positive results the customer will enjoy after you’re done.
• Mention the “extras” that others might not do — like lay down tarps to protect the customer’s property, full clean up and disposal of parts, etc.

If you asked your customer-facing staff how to answer a customer’s price objection, would they have good points to talk about?

Have a meeting with your service staff — and see how many ideas your entire team can come up with to explain to the customer why the job is needed, why it’s an investment in preventing future problems, why you’re the right company to do it, why doing it now will be the safest course of action, etc.

And be sure no customer-facing employee ever blames your prices on your advertising again.

Do Companies Really Raise Prices to Cover the Cost of Advertising?

l’m also hoping these plumbing companies haven’t actually raised their service fees to compensate for the cost of the advertising campaigns.

Service fees should be set to cover your variable costs, contribution to overhead, and provide some profit. But they also have to reflect what the competition is charging.

Does it make sense to spend advertising budget to get service people to a client — and then not get the job? The fact that you’re doing advertising (or any other marketing program) shouldn’t change the competitiveness of your service fees.

You Need a Complete Plan from Traffic to Leads to Sales — and How to Get to Every Step

As a marketer, I hate to see companies waste their advertising budget — when they haven’t put together a strong plan to close the traffic driven by that advertising.

As a company, you need to craft your entire “Sales Process” — including the answering of objections (a critical part of the Sales Process). Answering objections needs to happen on your website, and every customer-facing team member needs to know how to answer those objections as well.

Running ads isn’t the entire “marketing plan.” Time for company owners and their agencies to realize this.