I find that most Small & Medium Business (SMB) advertising is still trying to appeal to the customer’s logical brain. They operate under the assumption that consumers are rational and that self interest drives their decision making.

So one ad after another emphasizes the number of years a company has been in business and claims they have “great customer service”. NOTE: It’s not even the best. It’s apparently just like everyone else’s. It’s just great!

When businesses start to look alike, that’s a problem.

When businesses start to look alike, customers struggle to tell one from the other. So they turn to the only thing we’ve given them to evaluate one product from another: PRICE.

The problem is that people’s attitudes toward money are very strongly connected to their emotions, their values, and their self image.

So when the only thing customers have to compare is price, it quickly becomes the only factor they consider when deciding whether or not to buy from you.

So begins the never ending cycle of price competition which leads to lower revenue, lower margin, and lower profits. Eventually, the smaller players go out of business because they can no longer compete.

But then they make an even a bigger mistake!

At this point the natural tendency is to “give up on marketing”. And the reasoning usually goes something like this:

“We tried [blank] and it didn’t work”
“We did [blank] and got zero sales”
“We’ve tried everything and nothing works”

and then in total frustration…

“Most of our business comes from referrals anyway”

For the record, I don’t think they actually believe that.

But even if it’s true, that’s no consolation. Unless you really understand what’s driving the changes in your revenue, even growing revenue can mean fewer customers, and eventually that leads to fewer referrals and lower profits.