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      Entrepreneurs
      Six Marketing Tactics Worth Paying For
      Mary Crane, 05.17.07, 6:00 AM ET

      Here's the trouble with marketing programs: Unlike with hard assets like buildings or machinery, you may have little to show for your investment when the money's all spent.

      Marc Lore isn't fazed by such uncertainty. A serial Web entrepreneur and father of a two-year-old, Lore founded Diapers.com back in January 2005. Last year his Montclair, N.J.-based outfit posted sales of $11 million, says Lore, thanks to rabid interest from parents looking to buy diapers, soaps, bottles and baby formula for their little ones. (Lore expects to cross the break-even mark in 2008.)


      His big marketing bet: a Refer-A-Friend program that so far has racked up $200,000 in costs, including development and rebates. Lore credits the program with attracting 40% of Diapers.com's 200,000 unique users a month. "It was absolutely the biggest driver for [our] growth early on," he says.


      In Pictures: Six Marketing Tactics Worth Paying For


      Here's how the Refer-A-Friend program works. Moms and dads send an e-coupon from Diapers.com with a unique code to fellow parents. When their friends cash in on the coupon, they type in the referrer's code. From then on, every time those new customers place an order on Diapers.com, the referring mom or dad gets $1 in their Diapers.com account.


      Sure, those rebates can add up. But given that each order clocks in at $85 on average, that marketing investment amounts to a mere 1% of sales.


      Unlike many entrepreneurs, Lore seems to be striking a tricky balance. While keeping a lid on marketing expenses is critical, at some point you have to pay up if you want to drive sales. "Small businesses will say it's too expensive instead of looking at marketing strategies as an investment," says John Janstch, author of Duct Tape Marketing. Still, he says, a good marketing strategy is one thing "you can't really cheap out on."


      With that, here are some marketing strategies that are worth the investment.


      The first step most entrepreneurs overlook is defining the market--and its willingness to pay--for their product. (Indeed, such analysis is a fundamental step in any sound business plan.) Market surveys--online, direct-mail or by phone--can help, though they can cost up to $10,000. Online surveys are easiest. Zoomerang charges $599 for a year subscription to its service, which helps craft survey questions and analyze the data; Survey Monkey offers subscriptions starting at around $20 per month.


      You know you need a Web site, of course, but the key is getting the most out of it. Start with a clean design that tells people precisely why they should spend their time and money with you. Then budget a few grand for getting noticed by the big search engines like Google and Yahoo!. You can buy keywords like Google's AdWords, which help direct customers to your Web site (see "Marching Up The Search Stack") or even hire a "search-engine-optimization" expert (see "Should You Hire A Search Engine Consultant?").


      You'll also want to shell out for an effective e-mail campaign that will slice through the information overload and get your business noticed. Those that give customers a call to action--like Diaper.com's Refer-A-Friend program--will get more people onto your Web site or into your store.


      E-mail marketer Constant Contact charges $15 a month to blast e-mails to up to 500 addresses; $30 will get you up to 2,500. StreamSend charges $6 per month for 500 e-mails and up to $50 per month for 50,000 e-mails. Those prices include testing presentations in different e-mail formats--such as Yahoo! mail and Google mail--and tabulating the response and bounce-back rates. Note: You have to provide the addresses, which might require an additional investment in lists of names sold by list purveyors. (For more e-mail marketing tips, check out "Artful Spam" and "E-Mail Marketers Should Look Beyond Outlook.")


      Of course, no one hits on the perfect strategy on their first try. Instead of placing all your bets on one radio advertisement or telemarketing campaign, concurrently test two or three strategies on targeted groups of customers and in limited areas. "It's hard to convince companies to do this because they want to do everything rapidly, but then they end up wasting a lot of money," says Wharton's Lodish.


      In the end, remember that marketing isn't just about one tactic vs. another. It should be an ongoing effort that involves a variety of maneuvers to raise your business' profile against your competitors. "Look at the overall system," says Jantsch. "Look for ways to build momentum by having strategies work together. It's like building a house--the more pillars you build, the easier the overall job is."