This month we focus on budgeting, timing, and prioritization of your marketing.
To build a functional marketing budget, look at several key statistical elements. You need to quantify your prior 12 month’s gross sales and know your gross margin return on investment (GMROI). The worksheet that will enable you to do this is available in JA’s Annual Cost of Doing Business Survey. Next, analyze your specific sales categories against JA’s industry and see if you are under- or over-represented in any specific category, vis-à-vis the category averages.
Now compare what you spent on promoting The Big Two—watches and diamonds—versus such staple categories as gold jewelry, watch and jewelry repair (including new batteries), engraving, and your finance “club” plans. Then, total up your accrued co-op advertising dollars by category and match that to your actual co-op spending. (Are you using your co-op dollars to their best effect? Did you leave co-op dollars on the table? Could you have gotten additional co-op dollars from vendors in your more profitable categories? Are there vendors in your under-advertised/under-utilized, but more-profitable categories you could switch to without a loss of quality and design?) Last month’s column asked you to analyze your store messaging versus your brand messaging. Having determined what your personal level of store vs. brand messaging should be, you can now apply that to your marketing budget equation. You may need to leave some co-op dollars on the table, but at least it will be a conscious decision.
Established jewelry retailers who are working to grow their gross sales and also increase their share of the market routinely plow between 7 percent and 15 percent of their gross sales back into marketing. The savvy ones do it by using their co-op dollars to defray catalog page costs and get the better brands to build out wall units and window displays, replace tired awnings, and provide additional direct mail materials.
Remember, those who develop their business do it by asking for the business, and they get up to half, and sometimes more, of their marketing budget back from their suppliers, bringing their spending levels more in line with what the jewelry industry is accustomed to spending.
Once you’ve done your financial homework, it’s time to apply your knowledge to the calendar. To improve your sales in the critical fourth quarter, you need to have been asking for the business and establishing your presence and “voice” in the other three quarters. Don’t spend 75 percent of your advertising in Q4 just because you sell 75 percent of your merchandise then. It’s easy to fall into this trap, but you will almost certainly not break through the clutter of holiday catalogs and advertising with a meaningful message. If you do, it will be at a huge expense to your overall annual budget.
Instead, host in-store events or invite your best customers in for a private showing of some exclusive merchandise you just received from a favorite vendor. Organize a trunk show with manufacturer’s reps and designers who are touring to support their collections. (Now is the time to make your requests for the 2006 holiday trunk show/designer appearances and to request special pieces for your private showings. Don’t wait for the mid-year trade shows.)
By not fighting the fourth-quarter cacophony, you will stand out more clearly and have a better chance to deliver your marketing message to less jaded ears and jangled brains during the rest of the year. Jewelry always sells better when you are not shouting at your customer. Spread out your preferred methods for conveying your store’s brands and services.
If you use the most common forms of advertising like radio, television, and newspaper, rotate your commercials and print ads so that no more than two of the mediums overlap. There is no need for all three to run simultaneously. This technique is called flighting. Create a flowchart showing the various elements and when they’re on, off, and overlapping, and the duration each is scheduled to run. This will extend your marketing presence and share of voice in your market. This marketing technique, when paired with a thoughtfully derived budgeting process, will yield more effective results.
It also lets you concentrate on less crowded, but no less important, spikes in the retail jewelry sales year like post-Christmas, Valentine’s Day, Mother’s Day, Father’s Day, and graduations. This is your opportunity to initiate sales that will result in customers coming back in the critical fourth quarter to add on to a collection, trade in or upgrade a piece of jewelry, or buy a matching piece for their significant other. (Make sure to capture customer information and save it in your database.)
Where you spend your marketing money depends on the age of your store; whether you are in a growth, maintenance, or shrinking business mode; and what you have committed to in the way of your branded marketing messages and your store’s values messaging. It also depends on your satisfaction with the response rate of your current marketing vehicles. Make sure to track your Yellow Pages referrals versus the traffic level on your Web site, and not just raw number of visitors, but the number of clicks on each separate category on the site.
Next month we will delve into where to best spend your money to achieve more robust results, not just at the cash register, but in the all-important awareness, attitudinal, and intent-to buy categories as we seek ways to gain the retail advantage.
Rick Bannerot is the principal luxury goods and jewelry consultant for the marketing firm Wheeler & Co. in Old Greenwich, Conn. For the last four years, he was vice president, U.S. jewelry advertising and marketing, for World Gold Council. In 1999 he worked for Mayors Jewelers as vice president and director of advertising/marketing. Prior to that, he spent 12 years at Rolex Watch USA in the advertising and sports marketing department.