The federal government and states regulate advertising. On the federal side, the Federal Trade Commission (FTC) is the main agency that enforces unlawful advertising laws through proposed regulations. These advertising laws—often called "truth-in-advertising laws"—apply to businesses and cover all industries, including alcohol, tobacco, and nutritional supplements.
States also set rules and can take enforcement action, usually through their attorney general’s office, a consumer protection agency, and the local district (or prosecuting) attorney.
Companies that make false advertising claims can face lawsuits from more than just government watchdogs—competitors and consumers can also bring private lawsuits.
The FTC mostly relies on consumers and competitors to report unlawful advertising. It typically follows a series of steps when enforcing false advertising claims. When its investigation finds that an ad is deceptive, the FTC sends a warning letter to the advertiser. If the warning doesn’t work, the FTC can issue a cease-and-desist order (which is a stronger demand to stop the false advertising). Finally, if the advertiser violates the order, the FTC can go to court and ask for an injunction (a judge’s order to stop the advertising) against the company.
The FTC can also fine companies of up to and around $50,000 per day for violating advertising laws. The daily fine increases every year for inflation. For example, the daily fine per violation increased from $50,120 in 2023 to $51,744 in 2024.
State and local officials can also usually get court orders to stop unlawful advertising, and they can bring civil suits to compensate consumers. Consumers also have the right to sue advertisers under state consumer protection laws, in which they can seek refunds and other compensation. Lawsuits brought by a large group of consumers (called a class action) are particularly potent, because the combined damages of the class members are likely to be very high, prompting the target companies to take these suits very seriously.
Put simply, the law requires you to tell the truth about your products and services. Making a deceptive, unfounded, or misleading claim in your advertising is not just unethical, it’s a crime.
All advertisements must be:
You can’t claim or imply that your product or service does something it doesn’t, exaggerate the way your product performs, fudge on what it contains or the materials used to make it, claim it’s appropriate to use in a situation for which it is not designed, or make false or misleading comparisons or claims about your competitors.
The terms “false,” “misleading”, or “unfair advertising” distinguish different instances of unlawful advertising, but they each refer to advertising that's false in some way.
"False advertising" is a patently untrue claim. It's unlawful to say that customers who wear your sneakers will lose weight, or that eating your yogurt can cure disease unless you can show credible scientific evidence to prove your assertions.
You also can’t omit information vital to the features or benefits of a product or service. Advertising a vacuum cleaner at a deep discount and failing to say that it is not new, but refurbished, would be misleading customers by omission.
Advertising doesn’t have to be an outright lie to be unlawful. It's also unlawful to mislead customers by implying your product does something it won’t.
For example, advertising that ingredients in yogurt contain enzymes that prevent certain diseases would be misleading because it implies that the yogurt prevents diseases, even though the ad doesn’t expressly make that claim.
"Unfair advertising" refers to ads or practices that might cause unavoidable injury to consumers. Sometimes, injury or the risk of harm is an inevitable part of the product or service. However, the injury can't outweigh the benefit the product or service has to the consumer.
Advertising pharmaceutical drugs is a good example. These drugs typically have negative side effects—an injury to the consumer. So pharmaceutical companies routinely disclose the potential side effects to fairly convey the health risks of using their products.
In addition, when advertising makes a false or misleading claim about a competitor, it's considered unfair advertising.
Where you advertise—in print, on the Internet, TV, radio, and even in your store—doesn’t matter. Importantly, it also doesn't matter whether you intended to deceive. In practice, these requirements boil down to seven rules:
1. Keep claims accurate. Your advertising should tell readers or viewers exactly what they're purchasing. For example, you can use the terms “organic,” “certified organic,” or “100% organic” only if the product has been certified organic by the U.S. Department of Agriculture (USDA), and all of the ingredients in the product are also certified by the USDA. Or, you can’t say your shampoo is made of 100% natural ingredients if it contains some synthetic ingredients unless the amount of synthetic content is nominal.
2. Back up claims with evidence. If you're advertising the benefits of a product, you must be able to support your claims with valid research or studies from a respected, independent third party. Common situations when you'd need to back up your claims are for health care or wellness products for weight loss, improving memory, and reducing wrinkles.
For example, you can advertise that a facial cream will reduce the appearance of wrinkles. But you can’t say that the cream will get rid of wrinkles unless you can back up your claim with research or clinical trials conducted by a reputable organization, such as a university, hospital, or research lab.
Your product must also be the sole reason that the results you claim were achieved. Let’s say you’ve put your weight loss supplement through the expense of clinical trials, and the tests showed that subjects lost weight on your product. If the test subjects also followed a restricted diet and an exercise program, your advertising will have to clearly state that exercise and diet played a role in the results.
3. Be fair to competitors. When you compare your product or service to a competitor’s, compare all the features and benefits, not just those that compare favorably. For example, let’s say your cleaning service, Rosie Sunshine, charges fees based on a sliding scale for the size of the home, and your competitor charges a flat fee. You can’t say Rosie Sunshine is less expensive than your competitor if the lesser charges apply only to homes of a certain size.
4. Make sure advertised products are available. When you advertise an item on sale, you’ll need to have sufficient inventory of the item or clearly state in your ad that supplies are limited. Grocers in some states must issue rain checks allowing consumers to purchase an item at the advertised price at a later date if supply runs out during the sale period. If you’re selling a close-out item you’ll never carry again, your advertising should say that supply is limited.
5. Be truthful about pricing. Don’t advertise a discounted price unless you've previously sold the item at the full price. Don’t offer an item that's not in stock at a lower price and then try to sell a different, more expensive item to the shopper. (This tactic is commonly called "bait and switch.")
In addition, your sale price must be for a limited period. You can sell an item at an “everyday low price” all the time, but you can’t call it a sale price if there’s no end in sight for when the item will again be sold at the higher price.
6. Be upfront about testimonials and endorsements. Get permission before using testimonials, endorsements, or published reviews in your advertising and marketing. If your local newspaper published a glowing review of your restaurant, for example, get permission to use it before putting it on your website or including it in your ad. (For more, see our article on the rules for using customer testimonials.)
If you offer customers incentives (such as entry into a prize drawing for submitting a review) or have a relationship with the person giving the review, testimonial, or endorsement, you must disclose this fact to consumers. To stay on the right side of FTC rules, use plain, straightforward language and place disclosures close to the review or testimonial where consumers can't miss them. For instance, you can include wording such as, “This review was part of a promotion” directly underneath a customer's review of your product.
7. Use the term "free" only when it truly is. When you advertise something as “free,” it must be truly free of any conditions. If you offer a gift or a second item free with a purchase, you can't mark up the price to include the cost of that gift or second item. When you offer a buy-one-get-one-free promotion, clearly state the terms, such as the second item must be of equal or lesser value than the first.
The FTC revises regulations to adapt to emerging industries and new products. For example, the agency issued a guide to the use of environmental claims when terms like “green” and “eco-friendly” came into use. The FTC places additional restrictions on advertising for certain industries (such as alcohol and tobacco) and for certain markets, such as ads aimed at children.
Certain products and services fall under the jurisdiction of government agencies that often operate in combination with the FTC and state laws. Some examples include:
Social media advertising must follow the same rules and regulations that apply to any other ads. But because social media also involves styles of advertising unique to the medium, additional guidelines apply.
One of these new advertising styles is called "native advertising." This type of advertising looks similar to informational content written by journalists or other neutral, third parties. But in reality, the advertiser pays for the content to be featured.
Some examples of native advertising include:
Advertisers that use native advertising must disclose that they paid for or contributed to the content to avoid misleading consumers into thinking the content reflects the opinion of an objective, third party. The FTC published a set of guidelines for these types of ads, including requirements for writing and placing the disclosures.
It’s a good idea to keep an eye out for changes and new regulations because the FTC and state legislatures periodically add laws and guidelines for emerging industries and trends.
For example, while cryptocurrencies like Bitcoin have historically been unregulated, more than half the states in the country are now considering or enacting regulations for the industry.
Other additions and revisions in recent years include regulations for organic products, including the percentage of organic ingredients a product must contain to label foods “organic” or “100% organic.” The FTC also regularly updates guidelines for advertising to children.
If you have any questions specific to your company's marketing, talk to a business attorney who has experience with federal and state advertising laws. A lawyer can advise you on when to use disclosures and what to include in the content of your ads. If you've received a letter from the FTC over false, misleading, or unfair advertising, it's a good idea to reach out to a lawyer as soon as possible.
]]>Conventional marketing techniques include researching and analyzing customer groups and using the data collected to promote products or services to that audience. Social media marketing performs the same activities using online platforms such as:
Though generating sales is the ultimate goal of any marketing plan, social media marketing aims to accomplish the goal by drawing attention to a company’s products and services, engaging with customers, and establishing the company as a go-to resource for customers’ needs.
Many businesses can and do sell products and services via social media. But a social media marketing plan focuses on building relationships with customers rather than selling outright.
Some of the techniques used in social media marketing include:
Social media marketing can be organic or paid. Organic marketing refers to the use of free tools available on social media platforms, such as online posts and blogs. It’s usually a long-term strategy for connecting and networking with customers by providing useful information or entertainment and responding to their comments and questions.
Here’s an example of how organic social media marketing works: Rocket Socks, a manufacturer of sports socks, sets up a company page on Facebook, Instagram, or another channel, and invites customers to “friend” or “follow” the page. Next, Rocket Socks posts a regular schedule of content that might include tips for improving athletic performance, news about star athletes, notices of local athletic events, and new product launches.
The company’s friends and followers are notified of each new post to encourage them to visit the page. They can comment on the post or share it with others who aren’t yet friends or followers, and the newcomers in turn, can decide to become followers. Rocket Socks can also use its online posts to encourage its followers to visit their website by offering additional content, special discounts, contests, or newsletter subscriptions.
Businesses can also opt to use highly targeted advertising called paid social media. Each social media channel offers its own options and formats for paid media, but generally, these are advertisements such as print display ads, videos, or interactive ads. When you’ve visited a website and you later see the same products pop up on other sites you visit, you’re seeing paid social media at work.
Marketers typically use paid social media when they want to get faster results for their efforts. With organic marketing, a business can reach only its followers, and broadening that audience requires time for word-of-mouth to spread. By using paid media, marketers aren’t limited to their own followers. They select a target market from all the users on their chosen channel and the ads go out immediately to those viewers.
Pricing varies by channel. In general, the amount you’ll pay is based on the number of your ad’s so-called “impressions” (the number of times the ad appears). Another pricing format, pay-per-click (PPC), is based on the number of times someone clicks on your ad.
Social media can be especially helpful for small businesses that have limited resources.
Imagine that you attend a trade show and you’re able to afford only a single table with a banner. Next to you is a company with more square footage, fancy displays, and reps handing out candy and free gifts. Which booth do you think will draw the most attendees?
But an effective social media campaign doesn’t hinge on the money you have to invest.
Social media levels the playing field. A small business that maintains an active social media presence appears every bit as large as any other company, and it has the same opportunities to attract customers.
Social media provides wide exposure. The sheer number of people that use social media means greater visibility and access to a larger target market, two key ingredients for increasing sales. Add to that the free marketing options available, and you can see how small businesses can use social media marketing to grow.
Social media provides insight into customers. Social media platforms provide businesses with analytic data about customer demographics, behaviors, and preferences. Businesses can use this data to better understand their customers and improve products and services.
Social media yields a high return on investment (ROI). The biggest expense involved in organic social media marketing is time, so businesses can acquire new customers and additional revenues without a significant financial commitment. Even paid social media marketing costs considerably less than traditional advertising such as television, radio, billboards, direct marketing, or newspaper ads.
Despite its many benefits, small businesses often find it difficult to use social media marketing for several reasons:
It requires a time commitment. Creating social media content takes time and human resources (although artificial intelligence is increasingly useful for content creation). You’ll have to develop content that’s relevant to your customers, and you must publish that content on a consistent schedule. If you’re unable to dedicate staff or hire an outside contractor or public relations (PR) agency to manage your campaign (discussed below), your social media marketing efforts will flounder.
It requires diverse skill sets. Those who perform social media marketing must be skilled in several areas including graphic design, photography, writing, and data analysis. Posts, blogs, and videos must not only have visual appeal, they also must present information in a way that connects with an audience. You’ll also have to continually monitor social media efforts to be certain that you’re reaching the right audience and your messaging is connecting with your customers.
It must comply with privacy laws. State and federal governments as well as some international agencies regulate the way businesses can collect and store the data they use for social media marketing. Ensuring your social media activities comply with these laws can take resources from other aspects of running a small business. (Additional information on compliance with regulations is included below.)
When it comes to effective social media marketing, posting a photo or article or reposting other posts, or writing a blog once in a while won’t cut it. You’ll need to define a strategy and execute it consistently to see results. By following the steps below, you can get the most impact from your social media marketing.
Knowing what you want to accomplish and the types of customers you want to reach is necessary to determine which platforms to use and the types of content you create. Your goals also provide a benchmark for measuring your results.
Your goals can be as simple as increasing the number of followers you have or as complex as increasing your sales. What’s important is creating specific, measurable goals that you’ll be able to monitor over time.
Assess the time and resources you’re able to devote to your strategy at the outset, and tailor your goals to what you can realistically accomplish. For example, a business that sells home improvement products will clearly get a lot of traction from a series of YouTube videos explaining DIY projects. But if the business has only a few hours a week to devote to social media, no money, and no staff with expertise at making videos, a more attainable goal might be posting two DIY tips a week on the company’s Instagram page.
Check out your competition on social media to learn:
You, of course, want to develop a unique online personality for your business. But knowing what the competition is doing can help you to better target your audience and develop your own style.
While there’s some overlap, each social media channel has a distinct primary user population. For example, Facebook has a lot more older visitors than TikTok does. You can typically find information about a platform’s user demographics on its website.
It’s a good idea to also pay attention to the types of posts you see on each platform. For example, if your product or service lends itself to a multi-media approach, TikTok might be a better channel for you than, say, X or Threads, where posts are mostly text-based.
Develop a consistent style for your posts. Establishing a coordinated, unique brand identity helps viewers recognize your business and sets your company apart from the crowd.
The elements that make up your style include:
A voice can be buttoned-up and corporate, casual, humorous, authoritative, or any other communication style that fits your business and your audience. Whatever tone you choose, keep it consistent to make your brand easily identifiable.
It’s a good idea to plan out your content a month in advance so you’re not scrambling to fill posts at the last minute and you’re offering a well-balanced mix of posts. Include the topics you’ll cover, the visuals you’ll use, and the time of day you post. (At the beginning, consider varying the times that you schedule posts to see the days and times that get the greatest viewership.)
Be careful not to fill your page with promotional content. It’s okay to crow about your successes, announce new products, and talk about your expertise. But as a general rule, 80% of your content should be informational or entertaining, and only 20% should directly promote your company.
Parachuting into your social media page once in a while is the easiest way to lose your audience. Sticking to your publishing schedule will keep your audience engaged and establish your business as a reliable resource.
Acknowledge and thank readers for their comments. Remember that social media marketing is about establishing relationships, and the best way to connect is by establishing a dialogue with your readers.
Knowing what’s working and what isn’t is key to getting the most mileage from your social media marketing.
Just about every platform provides analytics that give you a wealth of information on your post’s performance. You can log into your account page to study metrics such as:
Track the metrics that are most relevant to the goals you set for your marketing. For example, if your goal is to increase the number of followers for your social media page, you’ll want to study engagement rates. If your goal is to increase sales leads, look at conversion rates.
You’ll want to track metrics for your posts to learn whether your content resonates with readers. If you’re using several social media channels, track the performance of each platform to determine whether your strategy needs tweaking. Compare metrics over time to assess the progress of your efforts.
Typically referred to as privacy policies, social media laws and regulations are designed to protect the customer information you collect and store. Privacy legislation is an area that’s rapidly evolving and marketers would be wise to keep abreast of new developments.
Some of the well-established laws affecting social media include:
State laws can also impose restrictions related to collecting, using, and disclosing customer information, and additional regulations apply to certain industries such as healthcare and finance.
Not to be overlooked, U.S. advertising laws apply to social media advertising as well. And if you’re planning on using AI tools in your marketing strategies, be sure to keep up to date with developing AI data privacy laws.
If you’re embarking on a social media marketing initiative, it’s a good idea to establish a written social media policy to ensure that your programs and practices are in compliance.
The rise in popularity of social media can’t be overstated. The most tireless small business owner can labor at traditional marketing for months (and probably years) without reaching the sheer numbers of consumers found on social media platforms.
Keep in mind, however, that social media marketing isn’t a quick fix. Just as your business plan includes one-year, two-year, and five-year goals, you should be prepared to develop and nurture your social media strategy over time in order to see results.
]]>With this new age of smart applications, it’s getting harder to tell what’s human-made from what’s AI-generated. That lack of distinguishability is what makes AI so interesting and controversial for humankind. As we become more accustomed to AI, small business owners, like others, are looking for ways to implement these tools to achieve what they couldn't before due to human constraints like time and money.
"Artificial intelligence" is the broad term used for technology that performs a task or solves a problem that previously required human intelligence. AI can be used for a large range of purposes, from finishing your sentences to writing a novel. The simplest example is the ability of your smartphone to suggest the next word in your text message.
The application in your phone has created a database of sorts of the words you commonly use (or that commonly follow other words). That’s how it knows to suggest “Berkeley” if you often send a message to your friend, suggesting lunch in Berkeley; and it might also suggest “me up” after you write “pick.” The app doesn’t use magic or thought—it uses data.
We use many other more sophisticated types of AI. You can pay your bills by phone using prompts from an automated voice. There, the software application uses a series of pre-programmed questions and responses, such as “Do you want to pay with the credit card on file?” to guide you through the process.
Siri is another instance of AI; when you ask for the name of the best Italian restaurant in town, Siri canvasses online reviews and distills them into a few sentences. The pop-up messages on websites, offering to help you, are nothing other than a response to what you have done so far on the site (or haven't done). The app figures out what you need by placing you among the thousands of users who've already visited the site (and ended up buying something).
As you can see, AI isn’t always the stuff of science fiction movies. It’s often as simple as a collection of information that the application consults when asked a question.
Yet newer, more sophisticated applications, like ChatGPT, can write a screenplay, design a clothing line, or respond in a way that’s sometimes indistinguishable from talking to a human. These newer applications, known as generative AI, can learn and improve as new data is added; but the more they learn to do, the more questions are raised about what they should be doing.
The use of sophisticated apps raises questions as to the app’s accuracy and, in some contexts, the ethics of using it. The sections below explore the challenges of using apps for various tasks in a small business.
AI applications fall into one of three categories, from the simplest to the more complex:
Let’s look more deeply at each of these increasingly sophisticated uses.
Small businesses have been using AI to book appointments, order items from a menu, take payments, and answer customer questions like, “When will my order ship?” These uses are fairly noncontroversial, with the possible exception of the ubiquitous “How can I help you?” pop-up. Many people find these pop-ups intrusive and they don’t trust them to really know what the customer wants or needs.
AI can help with both simple and complex marketing tasks such as:
Scheduling and implementing follow-up strategies, like drip campaigns. Let’s say a customer visits your website and requests an e-book or other information you offer. You can use an AI application to automatically send additional emails to the customer tailored to their area of interest.
Targeting specific groups of customers. AI can identify and group customer segments, to allow you to customize messages for each segment based on their preferences and needs.
Writing blog or social media posts, landing pages, and emails. AI can automate messaging such as emails for prospecting new business. It can also sort and direct responses to the appropriate person or department for follow-up.
If you don’t have the time or staff to write your own website blogs or social media posts, AI can write them for you. Some applications are even able to generate topic ideas.
Analyzing advertising responses and customer surveys. If you’ve ever used customer surveys to uncover problems with your products or services, you know that getting responses is only half the battle. The other half is analyzing the responses and identifying ways you can improve. AI can analyze and categorize responses, to help understand what’s going right or wrong with your systems or products.
When you advertise on social media like Facebook, you're already receiving AI analytics. They tell you how many people clicked on your ad and give you other information to help you evaluate the effectiveness of your advertising.
A number of AI applications are designed to let salespeople focus on selling instead of paperwork. They can accomplish tasks such as:
Prospecting for new business and generating leads. AI can reduce or eliminate the time it takes to chase down leads by sending outreach emails and categorizing and prioritizing responses for the sales team.
AI applications allow your sales team to focus on buyers most likely to make a purchase in the near future and to deploy strategies to follow up with longer-term prospects.
Qualifying buyers who respond to outreach campaigns. AI can ask potential buyers simple questions, like whether they're looking to make a purchase in the near term or how much money they expect to spend on a purchase. The answers to these questions help the sales team to prioritize the calls they make and reduce the chances that they’ll spin their wheels needlessly on buyers who aren't the right fit for your products.
In general, AI applications that handle back-office and administrative tasks are designed to eliminate the need for manual data entry. They can:
Monitor and manage inventory. Automating inventory management gives businesses real-time information on merchandise that needs to be replenished and reorders that should be processed, so they don’t miss out on sales opportunities.
Store and sort customer information. Applications can route customer information to the proper files and update databases, by making changes to customer addresses and the like.
Process orders and invoices. AI can automate your business’s processes, from requisition to invoicing, and integrate these procedures with accounting and inventory management software.
Process and issue refunds. Using AI to process and issue refunds eliminates the need for a person to monitor and respond to phone inquiries, and usually shortens the lead time for processing refunds.
Review documents for missing or incomplete information. If your business relies on numerous forms that you and your customers must review and sign, AI can replace the need to manually review the forms by alerting you when a document is incomplete.
Before you begin interviewing vendors who supply AI software, it’s a good idea to learn the terms the technology industry uses. Once you’ve clearly defined what you want the technology to do, these terms will help to refine your online search for the best suppliers for your needs.
While AI can, in some areas, replace human workers, this technology is most often used to free up time for workers to focus on more essential aspects of their jobs.
For example, salespeople can use AI to manage their prospect database and update it for each customer contact, freeing up time to contact the most likely buyer prospects and close sales.
Some additional reasons to use AI include:
Providing faster customer service. Automating processes like placing orders and handling returns means customers don’t have to spend time waiting on hold for a live representative.
Reaching more customers. Suppose you want to notify your customers of a new product you’re introducing. Automating your email system allows you to send more emails than a human worker can in the same amount of time.
Avoiding mistakes, oversights, and miscalculations. Using AI will eliminate the mistakes that typically occur when you're manually entering information for databases and recordkeeping. Automated systems can accurately track inventory and reorder promptly to avoid running out of stock.
Improving productivity. Using AI for marketing analytics helps to understand where your advertising dollars are producing the best returns.
Performing tasks you don’t have the resources to accomplish. AI can help small businesses make use of social media when they have neither the time nor human resources to manage these types of campaigns.
No matter how much you spend on AI, it’s likely not going to be a standalone solution for your business’s every need. To succeed, even the best AI solutions will require human intervention at some point in the process.
For example, AI that generates leads for your business won’t do a lick of good if the sales team doesn’t make follow-up calls to the most likely buyers.
AI that analyzes the results of your marketing reports won’t help you decide where to best put your advertising dollars if no one reads the reports the automated system provides.
AI that is premised on an outdated data scoop will not give you accurate results.
Likewise, when AI isn’t able to handle more complex customer inquiries or complaints. You won’t generate much customer goodwill if you don’t include an option to talk with a live agent.
When you're purchasing AI tools, you must first decide on the tasks you want the software to accomplish. Each application is designed for a specific purpose, and, in some cases, for a specific industry. For example, automated ordering software designed for restaurants is different than software designed for ordering wholesale merchandise.
The companies that offer software you already use are a good place to start when you want to add AI capabilities. These same companies might offer AI tools you can add on, or they might partner with other companies that offer AI software. When you start your research with vendors you already use, you’ll also be certain that the new tools you purchase are compatible with your existing software.
Your research should also explore the degree of technological expertise required to use the application and the training and support the vendor offers.
Like many IT solutions, AI is sold in off-the-shelf applications for hundreds of dollars or less, or you can customize solutions for hundreds of thousands of dollars.
The more complex the chore that you want AI to complete, the bigger the tech stack (series of technologies stacked one over the other) required to build the app. Accordingly, those apps are more expensive than a simple tool that auto-fills a repeat customer’s orders.
Email management software is the least expensive of AI applications. Vendors typically offer the software for a monthly subscription at costs that range from $10 a month to a few hundred dollars a month.
The cost of chatbots varies widely, depending on the capabilities you want.
When you're budgeting for the cost of implementing AI, remember to include the technical support and training you’ll need in addition to the software licensing fees.
It’s also a good idea to pay attention to the integrations a vendor offers (the ability of one company’s software to interact with software from other companies). Choosing a vendor that offers numerous integrations allows you to expand your AI capabilities by adding new software down the road when your needs change or expand.
Following common sense rules, such as involving human oversight into your use of AI, can help avoid common problems associated with AI. As noted earlier, it’s important to give customers the option of talking to a real human, so they don’t become frustrated when an automated response doesn’t solve their problems.
However, the most serious problem with AI, and the reason it's become so controversial, is that the technology is quickly advancing to a point where it'll be difficult, if not impossible, to distinguish between images and information that are computer generated and those created by humans.
It won’t be long before AI technology is able to generate a completely lifelike avatar that can be used to sit in for the human it was designed to replicate on a video conference. Imagine the consequences if one of these avatars is substituted for the CEO of a powerful organization and provides shareholders, the press, or others with false information.
Left unchecked, AI can be used by bad actors to steal identities, bully the unsuspecting, spread misinformation and fake news, or release propaganda for political or competitive purposes.
Even when no harm is intended by the user, AI can make mistakes. A mayor in Australia recently threatened a defamation lawsuit if the developers of a popular AI application didn’t quickly fix an erroneous report that named him as a participant in a bribery scandal. He was, in fact, the whistleblower who reported the criminal activity to authorities.
One of the most widely recognized flaws of AI is its tendency to fabricate information when it doesn’t have all the data it needs. The result can be libelous as exemplified above, misleading, or just plain weird.
In one instance, an AI program used by the Los Angeles Times became confused and reported that a large earthquake had just occurred in Santa Barbara. It turned out that the earthquake in question took place in 1925.
AI can be one of your business's greatest assets or a serious liability. As you choose which AI processes to invest in and start incorporating them into your daily operations, it's important to continuously monitor their performance and your business's. Remember that these applications are tools to help you run your company—they're not meant to take your place. At the end of the day, you'll need to make the final business decisions.
]]>But the field of influencer marketing extends well beyond the TV and film stars or athletes who are household names, and many are well in the reach of small business owners.
An influencer is someone who affects buying decisions by creating social media content that informs, entertains, or both. Sometimes their digital content is based on their expertise, but it can also be based on their passions and interests.
In other words, an influencer doesn’t need formal credentials. Though their authority might come from expertise such as work experience or education, just as often it comes from their position on a social media platform and the relationships they build with their followers. The more an influencer is able to attract and retain viewers, the more followers they earn.
You’ve probably seen celebrities endorsing big brands, but many other influencers are the same people you might come across in everyday life. An influencer is defined by the number of people they reach and the degree to which other people pay attention to what they have to say.
An influencer can be:
Influencers can be categorized by the number of followers they have. Big names are macro- or mega-influencers. They have at least 100,000 followers and often command attention from more than one million people.
It’s the nano and micro influencers who are most accessible and beneficial to small businesses. These influencers have less than 100,000 followers. Many have communities of less than 10,000 people.
People follow mega influencers because they want to be like them, but they follow nano influencers because they are like them. Nano and micro influencers are relatable, and for that reason, they often have the deepest connection with the communities they build.
The relationships these types of influencers develop are the reason they’re so effective in promoting a brand or a product in spite of their smaller follower numbers.
Influencer marketing—a type of social media marketing—can not only get the word out about your business and products and help you stand out from the competition, but it can also be more cost-effective than many other types of advertising.
Influencers can help a small business:
Build awareness and drive sales. Working with an influencer in your market space exposes your brand, business, and products to a large number of potential customers. For example, if you have a clothing boutique, a style influencer can introduce their fans to your products by modeling and reviewing outfits from your store. Because an influencer’s followers are already interested in subject matter related to your products, they’re more likely to become your customers.
Establish credibility. It can take years for a business to build trust with customers, but influencers have already gained the trust of their followers. Your business and products automatically piggyback on that trust when they’re featured by an influencer.
Save money on advertising. Influencer marketing generates higher returns on investment than many other forms of marketing. Research shows that influencer marketing can generate $5 to more than $6 in sales for every dollar spent.
Improve SEO. Search engines like Google and Microsoft Bing look at several factors besides keywords to rank your website, including the number of backlinks (links from other websites or pages) to your site. Partnering with an influencer increases the backlinks you get and improves your search engine results.
Influencers typically establish their own personal brand around a lifestyle, such as cooking, athletics, or parenthood. As a marketer, you want to choose an influencer whose subject matter intersects with your products or services.
The industries most often covered by influencers include:
Influencers live on social media, so checking social media feeds is the way to find them. They often post daily or at least a few times a week, and they might also be mentioned or quoted in digital articles related to their chosen subjects.
That’s not to say that finding an influencer is easy. Research takes time, and it takes even more time to ensure that the influencer you choose is the right one for your business.
These steps will help you find the best match for your business.
Before you begin your search, take stock of your brand characteristics so that you can identify influencers who are the best match.
Consider the following about your brand:
Your target market. The influencer you choose should “talk to” the target market you serve—including factors like age, marital status, and income. If your products appeal to Generation Z, for example, you’ll want an influencer with a Gen Z audience.
Your brand personality. Is your brand corporate? Casual? Fun? Pay attention to the tone of voice the influencer uses and whether it matches your brand personality. Humor, for example, might work for a fitness product, but you might need a more serious tone of voice if you’re selling a nutritional supplement.
Your mission and values. Every business tends to have a unique set of values that represent the company culture. For example, a technology company might value innovation above all else, whereas a design company might be dedicated to sustainability. The influencer you choose should share your company’s values.
Each social media platform appeals to different target markets, and some platforms are better suited to certain formats than others. For example, demonstration videos are best featured on YouTube. TikTok is best known for featuring fun videos with music, and Instagram posts often focus on eye-catching photographs.
Influencers, too, tend to focus on specific platforms. So you’ll want to know which platforms are most valuable for your brand and messaging and choose influencers who use those platforms.
You can DIY your influencer search or use one of the many influencer marketplaces to identify candidates that match your needs.
If you’re conducting research on your own, be aware that the first keyword or hashtag you use might do little more than lead you to other pages. Be prepared, patient, and follow the trail.
Below are a few avenues to try.
With Google and Bing, use keywords based on your industry. You can also search the keyword, “influencer” or “blogger” along with your industry. But be aware that unless you specify nano or micro influencer, you’re likely to get results for the big-name influencers.
For example, a cosmetics company might search beauty bloggers, makeup reviews, or top nano beauty influencers.
You can also search Google or Bing to find bloggers in your industry. Try subscribing to blogs when the content matches your needs to get to know the bloggers and the types of content they typically publish.
You’ll want to use influencers who are active on the platforms that are best suited to your business. Search procedures differ somewhat from one platform to the next. Here are some ways to start a search based on the platform:
For Instagram, TikTok, and X (formerly Twitter). These platforms have search bars you can use to insert hashtags for your industry and other tags that apply to the subject matter.
For example, the cosmetics company looking for a beauty influencer might use “#makeup,” “#beautytips,” and “#beautyblogger.”
For YouTube. YouTube also has a search bar for conducting research. Because YouTube videos are often educational, the same cosmetics company hoping for an endorsement in a makeup demonstration or product review might use keywords such as “makeup tutorials” or “makeup reviews.”
For Facebook. Enter keywords in the search bar to look for groups about your chosen topics. Some groups are private, and you’ll be required to go through a process to gain admission, so it’s best to focus on the public groups. Participants in relevant Facebook groups can have large followings that’ll make them good influencers for your needs. You can also filter the results by location if you’re looking for an influencer in your city.
For Threads. Log into Threads through Instagram and use the same procedures you would for Instagram.
For LinkedIn. LinkedIn is generally best for B2B marketing. It also has a search bar you can use with or without hashtags. If, for example, you own a recruiting company, you might use a keyword like “human resources experts” to find an influencer.
To shortcut research time, consider using an influencer marketplace. These marketplaces include directories of influencers. Some offer free search tools, and others charge a fee for accessing their databases and other information.
Some marketplaces specialize in certain industries, some specialize in certain social media platforms, and some offer additional tools to analyze an influencer’s performance.
Some of the marketplaces offering influencer research include:
The number of followers an influencer has is important, both for achieving the reach that you want and because it’s key in determining their fees. But don’t stop at the number of followers. You also want an influencer with strong relationships with their community.
Additional factors to consider when picking an influencer include:
Make sure you review the profiles of the influencers you’re interested in and visit their website if they have one.
Although an influencer who doesn’t have experience working with other brands might be effective for you, the hiring process will be easier with one who’s worked with other companies. They’ll likely have established a process and parameters for what they will and won’t provide.
Influencers receive all sorts of messages, so your email should be personal and to the point.
Don’t rely on an email exchange exclusively. When you identify an influencer you’re interested in using, arrange a phone conversation to talk through your needs.
The amount you can expect to pay an influencer varies depending on the influencer, their follower numbers and engagement metrics, the type of campaign you’re requesting, the subject matter, and more.
Some influencers might work with you in exchange for a gift of the product, some negotiate each partnership, and others use standard rate cards.
For nano and micro influencers, fees for social media posts typically range from $10 to $25 per 1,000 followers, and additional fees apply based on the performance of their post, namely the number of engagements.
The average fee for blog posts is $60 per blog and YouTube fees average $20 per video with additional fees based on the number of views.
It’s important to have a contract when you bring an influencer on board. Your agreement should detail items like the length of the campaign and where it’ll be featured, and whether the agreement is exclusive, in addition to the fee.
Influencers can add value to your business, but only if you hire the right ones and use them correctly.
Sponsored content must be disclosed on the post. Make sure the influencer you choose includes terms like “sponsored content,” “paid ad,” or a statement that merchandise was provided in exchange for the post. These disclosures aren’t just the right thing to do. They’re legally required.
Choose influencers that stand by their opinions. Steer clear of influencers who promote many different types of products with no apparent justification. To be effective, an influencer’s followers must trust them. If the influencer makes dubious claims or endorses products that don’t seem to have much relevance to their overall content, they probably don’t command the trust of their followers.
Are they authentic? The best influencers are users of the products they promote. Encourage honest feedback from an influencer you’re considering to determine whether they’re the right fit for your product and brand.
]]>Remember, though, that having a bare-bones website won’t guarantee you’ll get noticed. You’ll also need a strategy to attract customers to your website.
Even the simplest small business website will help customers feel confident that your business is legitimate, but your website can also help you stand out from the competition and build your business.
A website can enhance your business by:
Making it easy for customers to find you. If you have a brick-and-mortar location, you can make it easy for customers to find your phone number or your address. A website that includes contact information and hours of operation also saves you time answering phone calls from customers seeking basic information—and of course, the information is available 24/7.
Generating leads and potential sales. Most customers today start their search for products and services online, and having a website puts your business in the mix for consideration.
When you set up your website to collect contact information from visitors, you’ll also have the ability to follow up directly with potential customers. You can add a section entitled “Contact us for more information,” with fields for customers to enter their names, phone numbers, and email addresses.
Giving your business a brand identity. Using distinctive colors, logos, fonts, and icons on your website will help customers recognize your business and separate your company from competitors.
Increasing the effectiveness of your advertising. Social media advertising platforms provide you with analytic information, such as the number of people who clicked on your ad or website. If you advertise on Facebook or Google, you can direct customers to your website and track the effectiveness of your advertising dollars. The analytic information these sites provide will help you to know which ads perform best so you can get the most mileage from your ad dollars.
Informing customers about changes, new offerings, and other updates that might affect or interest them. By posting information about events such as store closings, special holiday hours and sales, and new products on your website, you’ll earn customers’ goodwill and the opportunity to increase your sales.
Having a website is one thing. Getting potential customers to visit your website is another matter entirely. You’ll need to employ one or more additional strategies to make sure your website isn’t just sitting out in cyberspace, unnoticed.
You can drive traffic to your website in a number of ways:
By including your website address in your marketing materials you’ll let customers know that you have a website, but the strategy alone won’t encourage customers to visit your website.
You should also consider giving customers incentives to visit your website such as coupons for discounts and free information related to your business.
For example, a restaurant might offer first time visitors a free dessert or a discount on an entree.
To drive traffic to your website, you’ll want to include links connecting your website to other digital marketing efforts.
For example, let’s say you own a fabric store, and you post pictures from a recent textile trade show on your Instagram page. Your post might include a mention that your store has just received a stock of new fabrics and a link to invite customers to your website to view the new merchandise.
Use color to make your link prominent and consider using wording that encourages customers to act. For example, instead of saying, “Click here for more information,” the fabric retailer above might use a link that says, “See more of the latest fabric trends here.”
One of the most effective ways to attract free leads to your website is with a method called search engine optimization (SEO). SEO strategies help you capture potential buyers who are already looking for products and services like yours.
By employing these tactics, you can increase the chances that your business will appear prominently on the list of companies people see when they use a search engine like Google or Bing to find a product, service, or business online.
SEO works this way: When someone types a word, phrase, or question into the search bar, the search engine scours the internet for similar words. This so-called keyword search generates a list of relevant websites. When your website includes keywords searchers are likely to use, your company is more likely to appear higher on the results list generated by the search engine.
Let’s say you own a public relations company that specializes in the healthcare industry. To improve your chances of appearing on a search engine results page, you might design your website to include subject tabs like, “public relations for hospitals,” or “public relations for medical groups;” or you might include blogs related to healthcare and public relations on your website.
The more the content of your website includes the most commonly used keywords and phrases for your business type, the more likely the search engine is to feature your website prominently when someone searches for businesses like yours. Google offers a free keyword planner to help you choose the best keywords.
Deciding whether to build a website yourself or hire a website designer comes down to these considerations:
DIYing your website isn’t as difficult as it sounds. Many companies offer templates you can modify for your business or industry at affordable prices. Some are even free of charge.
You won’t need much technical know-how to use a website template, called a website builder (more on website builders below), and this approach allows you to update your website yourself. However, you won’t be able to make large scale revisions like changing the format of the pages with this method. And while you can choose from many colors and fonts, the ready-made layout doesn’t give you a lot of room to distinguish your website from others using the same template.
If your business has unique characteristics that you want to feature on your website, and you have an ample budget, hiring a designer might be your best option. The cost of hiring a website designer ranges from a few hundred dollars to thousands, depending on their skill and your needs.
You can also hire a designer who will use a website builder to create your website. This approach is likely to cost less than hiring a designer to design the website from scratch.
The best website builder is the one that works best for your small business. Start by making a list of the information you want to include on your website. Website builders allow you to review the templates available, and you’ll be able to evaluate which template can best be adapted to the types of content you want to include.
For example, a photographer might need a website to display a portfolio of work, whereas a business consultant might want a page for a bio, another for services offered, and several pages devoted to case studies that show the ways in which the consultant solved problems for past clients.
Ecommerce websites require specialized capabilities, so if you expect to conduct ecommerce on your website, look for one designed specifically for that purpose.
Regardless of the template you choose, most website builders allow you to format your website so it’s easily viewable on desktop computers and mobile phones, a must for most businesses.
Many website builders allow you to try out their programs for a limited time at no cost. It’s a good idea to take advantage of this try-out period, to compare the relative ease of use for each of the builders you are considering. Just as some people prefer Android phones and others prefer Apple, you’ll want to choose the builder with instructions and prompts that are easiest for you to follow.
You’ll also need a website domain (the address that lets customers find you on the internet); and some builders like Wix, Squarespace, and GoDaddy allow you to purchase a domain along with the template.
]]>When used as part of your marketing plan, online contests and giveaways can be quick to set up and affordable to run. Properly designed, they offer an excellent return on investment.
Before you launch a giveaway, you should set clear goals. What do you want to accomplish with this contest? Common goals include:
You may have a number of goals in mind---if so, prioritize which are most important. You should assign a number that can be measured to each goal, if possible. For instance, if your number one goal is gaining new email leads, set a goal of capturing 300 new emails for your contest. This way you will know whether your contest helped you reach your marketing goals.
Online contests create buzz around your company. Whether you are advertising a specific product or looking to gain followers, a giveaway brings attention to your brand and encourages people to interact with your business.
You can ask people to follow your social media accounts or leave a comment to enter the contest. You can also ask people to share your contest, which helps you reach a new audience. The right hashtags also attract new customers. This kind of engagement increases brand awareness and builds positive relationships with your audience.
A giveaway is also good way to build excitement when you launch a new product. Using your own products as prizes is a smart marketing strategy.
Online contests are a great way to build your email list. An email list is the number one marketing tool for online businesses, and it’s important for brick-and-mortar stores too. While many businesses focus on social media, you don’t control social media platforms. If Instagram shuts down tomorrow, you lose all your followers. But you own and control your email list. This makes it a safe and important investment.
You can ask participants to fill out a simple form or respond to a survey question to gain a raffle entry. For instance, if you are a personal trainer you might offer a free week of video training sessions. Your entry form could ask people what kind of workouts they like best: yoga, strength training, HIIT, or cardio. This entry method provides you with email addresses and valuable insight into your product and services. Based on your raffle entries, you now know which type of videos your audience likes best.
Your goal with any contest is to get more potential customers to visit your website. The best way to do this is to host the contest on your site.
Create a giveaway link that drives traffic to a landing page on your site. You can share your link on social media to drive people to your website to enter the contest. Include links to your most popular blog posts or products on the landing page. This encourages people who visit to enter the contest to stay and explore what you have to offer.
There are many types of online contests you can offer. The easiest option for businesses new to online marketing is a simple raffle. Participants enter the contest, and a winner is chosen randomly.
If your business has online marketing experience, you can design your contest around user-generated content. User-generated content is any content---photos, reviews, videos, text---created by people and not brands. Popular contests formats ask participants to create or caption a photo or video and ask others to vote for a favorite.
Retweet (on Twitter), follow and comment (on Instagram), and like and comment (on Facebook), are also ways to structure giveaways.
Popular giveaway prizes include money, gift certificates, and free products or services. The most important thing to consider is how attractive your prize will be to your target audience. To get the biggest return on your investment, you want to reach the greatest number of potential customers. Choosing a desirable prize is the best way to get people interested in your contest.
If you already have a social media following, you can poll your audience about which prize they would like. This helps you select an enticing prize. It also creates excitement about the upcoming contest and increases audience engagement.
You need to set rules for your online contest. Eligibility, how to enter, and how the winners will be selected are all factors you need to define. In addition, you must pay attention to the rules of the particular social media platform you choose to run your giveaway from. There are federal and state laws that govern how you run your online contest. For more information on these rules, see Nolo's article, Rules for Running an Online Contest.
To maximize the success of your online contest, you must promote the giveaway to reach the largest number of people in your target audience. Consider partnering with another company who offers a complementary product or service. This will help you reach a greater audience.
Use blog posts or guest posts to advertise the giveaway and your newsletter, if you have one, to announce it to your list. You can also use offline promotion, such as postcards, radio, and television to promote the online contest. If you have the advertising budget, you can also buy ads or promote on giveaway directories.
The easiest and most popular way to select a winner is randomly. There are many websites that can help you pick a random winner. All you have to do is assign a number to each valid entry. An easy way to do this is to assign a number in the order the entries were received. Then use a random number selection website like Google’s Random Number Generator or Math Goodies Official Random Number Generator to randomly select a winner. It’s always a good idea to take a screen shot of the result so you can document how the winner was selected.
Another option is to select from comments on a post. You can filter entries by the “correct” answer and then select the winner randomly. Woobox’s Pick A Winner tool makes it easy to select winners for contests run on Facebook. Business owners can sign up for a free account. And Easypromo's Instagram Sweepstakes App provides similar services for Instagram contests.
You can also allow people to vote for the winner. These contests are often fun and have high engagement levels.
One way to measure the success of your contest is to determine if you’ve met your goals. Some goals are easier to measure than others. If your goal was to increase brand awareness, it might be difficult to assess objectively. Specific goals, like gaining 300 new email subscribers, are easy to measure.
It is important to count the number of leads generated by your contest because the purpose of running a giveaway is to grow your audience. Social activity metrics, website analytics, shares, and tags provide insight into how many people you reached with the contest. If you carefully design your contest with an entry form that captures emails and interests it can be easy to keep track of new leads.
]]>Before you launch your online contest, you need to consider and create the giveaway rules. You also need to make sure your online contest rules follow state and federal regulations and social media platform rules and requirements.
The first thing to determine is whether your online giveaway is a sweepstakes or a contest. Most online giveaways are sweepstakes. A sweepstakes is a game of chance. Anyone can enter and the winner is selected randomly. In a sweepstakes, everyone has the same chance at winning. If you own a coffee shop and offer the chance to win a free year of coffee beans to everyone who likes your store on Instagram, you are running a sweepstakes.
Online contests are also free to enter but they involve some level of skill or judgement. Contests ask users to upload their own content---photos, videos, stories, or performances---and someone selects the winners. In a true contest, everyone does not have an equal opportunity to win. If you ask contestants to create a spring cup design for your coffee shop and have a panel of judges vote on the winner, you are running a contest.
Both sweepstakes and contests are giveaways because contestants can enter to win for free.
If people pay to enter your contest, it is no longer a giveaway. When people have to purchase a ticket or a product for a chance to win, the giveaway becomes a lottery. Lotteries are a form of gambling and are highly regulated by state and federal law. You must have a license to run a lottery. Any lotteries conducted without the proper paperwork are illegal and can result in criminal charges.
In order to avoid accidentally running a lottery, your giveaway rules should clearly state that no purchase is required to win. Sometimes businesses do provide a contest entry with a purchase. An example of this is McDonald’s Monopoly game. When you purchase an item from McDonald’s during the contest you automatically get a chance to win a prize. However, the official contest rules also provide an alternative method to enter. People can enter by filling out a form online or sending an entry form through the mail. As long as a free entry option exists, your contest will remain a giveaway.
Every contest must define the terms, identify the prize and describe the method for selecting winners. All of your contest promotions must provide a link to these official rules.
The terms define the elements of participation in your online contest. They include:
Be specific when describing the prize. If you state the prize is $1,000, clearly identify whether that means $1,000 in cash, or a $1,000 gift card for your services with no cash value.
Do not leave any part of the prize subject to interpretation. If you offer a grand prize trip to Hawaii, spell out what the trip includes: airfare, hotel, food, excursions. You can include as much or as little as you want in the prize. But you must decide what’s included and communicate it clearly in the official giveaway rules.
In a sweepstakes, winners are selected at random. You should use a third-party to select random winners so you can’t be accused of impropriety.
If your online giveaway is a contest, you must spell out the method and criteria used to judge entries and select winners. You should identify who will select the winner and describe the criteria that will be used. Include objective criteria in the official online contest rules. If the contest does not use objective factors, state that winners will be chosen based on personal, subjective determination.
These three elements comprise your promotion and are legally binding. Be sure to draft them carefully.
If your contest selects winners based on user-generated content, you must consider copyright laws. Participants who submit original work, like photos, videos, stories, and music, to your contest maintain the rights to their work.
This means that you if want to use any of the content submitted by participants for your own purposes, you will need to get permission from the individuals. A blanket statement in the online contest rules requiring entrants to assign rights to any work submitted to the contest is not enough.
You might want to have entrants specifically sign a consent form at the time of entry. Or you can seek consent only from those participants whose content you’d like to feature. This can be done electronically through email or direct messaging on social media platforms. Most of the time users are thrilled to let you feature their content. But it’s better to be safe than sorry.
If your contest involves high value items, such as cars, trips, and cash, there are extra hurdles. You should have winners sign an affidavit of eligibility declaring they are eligible to win the prize. You must also collect winners’ Social Security numbers for all prizes over $600 so you can report this information to the Internal Revenue Service (IRS).
You should also have winners sign liability and publicity releases. The publicity release allows your business to use, display, and publish a winner’s identity, including their name and photo, in promotional materials related to the giveaway. This differs from the usage rights discussed above which allows you to use specific content the user created for the contest for your business. The liability release protects you and your business from liability for taxes, claims, demands, or losses related to the contest or prize.
Several federal agencies have jurisdiction over sweepstakes promotions, including the Federal Trade Commission (FTC), the Federal Communications Commission (FCC) and the United States Postal Service (USPS). You must identify online contests as a promotion. This means that your contest is an advertisement for your business, and under FTC rules all marketing communications must be clearly identified. You must also include a privacy policy disclosing how your business will use personal information collected during the giveaway. All communications from your business must provide an easy way for people to remove themselves from your mailing list. Finally, any partnerships or endorsements should also be disclosed.
You must also report certain contests to the IRS. Your online contest rules should inform contestants that winners are liable for any and all taxes related to their prize and that winners will receive a Form 1099 from the IRS requiring them to declare the amount of their winnings.
Many states have their own laws and regulations governing online contests. For instance, California prohibits the use of the word “lucky”. Each state usually has information about contest rules on their official websites. You should design your contest to meet the most restrictive state rules. Always include a “void where prohibited” disclaimer.
Given the various federal and state regulations, it’s always a good idea to have your attorney review your official contest rules.
Each social platform has its own rules about giveaways. For instance, Facebook requires all contests to include official rules, eligibility requirements, and a statement that Facebook is not a sponsor of the contest. It also prohibits contests that require entrants to “share” a post to enter a contest.
Make sure your giveaway rules comply with the terms of service of each social media platform you are using. You can find the full details of their guidelines on each platform’s policy page.
]]>Recommendations come in many forms, including word of mouth, reviews, and product endorsements. You can also create social proof for your business by publishing customer testimonials. But before you add testimonials to your marketing campaign, there are some things you need to know.
Customer testimonials are statements made by actual customers that affirm the value of a product or service. They’re usually made voluntarily by satisfied customers, often without compensation. When celebrities, spokespersons, or influencers endorse a product they receive payment.
The best client testimonials are brief, direct, and authentic. They include quotes or personal anecdotes describing the benefits of a product or service.
Customer testimonials are great for your business. They build trust, create goodwill, and establish a positive brand identity. When combined with targeted advertising and good sales copy, testimonial ads are effective at generating sales.
Given a choice between two similar products, customers will usually select the one with the most positive reviews. Client testimonials provide reassurance that people are making the right choice. The more positive reviews your business has, the more you can influence buying decisions. Testimonial marketing helps turn leads into paying customers.
Client testimonials are subject to truth in advertising rules. The rules are described in the Guides Concerning the Use of Endorsements and Testimonials in Advertising prepared by the Federal Trade Commission (FTC). All testimonial ads must be truthful and not misleading. The FTC requires transparency when using reviews and endorsements in your marketing.
An endorser that has a financial, employment, personal, or family relationship with a brand must disclose the affiliation. If employees promote your products, they must disclose that they work for your company. One way to disclose the connection is with tags or hashtags, like #ad, #sponsored, or #paid, on social media promotions.
Anyone who receives compensation, including free products or other gifts, for their endorsement must also disclose their relationship with your company. This includes people who make a commission off the sale of products they recommend. State disclosures clearly in the post and make sure they are easy to find. This helps customers distinguish between advertising and personal recommendations.
Ensure that all customer testimonials are accurate. Endorsements must reflect the honest opinions and experiences of customers. Avoid claims that are too good to be true. Make sure customers share the full story. Don’t improperly attribute positive outcomes solely to a product or service.
Client testimonials must also reflect the typical experience of users. If a testimonial ad does not show the usual outcome, it must state “results not typical.” As a business owner, you are liable for false, misleading, or unsubstantiated endorsements.
Create an agreement with customers who provide testimonials. This protects you in case the customer later wants to retract their statement. Never make up fake reviews or attribute statements to individuals without their express permission. This violates truth in advertising laws.
In the agreement, ask the customer to affirm the statement is true, voluntary, and based on their experience. You can also have them attest that they were not paid for their endorsement.
There are two ways to get testimonials from your clients. You can ask for them or you can wait and watch for them. Try asking your best clients for a testimonial. These already satisfied customers may be happy to provide a reference for your business. Keep your ask short and direct. You can even help guide customers with what to say.
You can also watch and listen for authentic testimonials. Positive reviews happen every day. You may receive a glowing email or even a handwritten thank you note. Social media is full of positive posts about your company. Be alert for these genuine endorsements. When you see good press, take a screenshot, save it to a file, and immediately reach out to the person thanking them for their review. Ask them if you can share their words on your website.
Most websites that publish reviews have terms that provide user-generated content is owned by the user and licensed by the website. If you are browsing the Internet and see a glowing review for one of your products, you cannot copy and paste the review to your own site. Lifting a testimonial--even one about your own business--violates intellectual property laws.
You can provide a link from your website to positive reviews posted on other sites.
]]>Each business is unique, however, and the decision to buy or lease business equipment must be made on a case-by-case basis. Here's a look at both options.
Leasing business equipment and tools preserves capital and provides flexibility but may cost you more in the long run.
Less initial expense. The primary advantage of leasing business equipment is that it allows you to acquire assets with minimal initial expenditures. Because equipment leases rarely require a down payment, you can obtain the goods you need without significantly affecting your cash flow.
Tax deductible. Lease payments can usually be deducted as business expenses on your tax return, reducing the net cost of your lease.
Flexible terms. Leases are usually easier to obtain and have more flexible terms than loans for buying equipment. This can be a significant advantage if you have bad credit or need to negotiate a longer payment plan to lower your costs.
Easier to upgrade equipment. Leasing allows businesses to address the problem of obsolescence. If you use your lease to obtain items that may be outdated in a short period of time, such as computers or other high-tech equipment, a lease passes the burden of obsolescence onto the lessor. You are free to lease new, higher-end equipment after your lease expires.
Higher overall cost. Leasing an item is almost always more expensive than purchasing it. For example, a 3-year lease on a computer worth $4,000, at a standard rate of $40/month per $1,000, will cost you a total of $5,760. If you had bought it outright, you would have paid only $4,000.
You don't own it. You don't build equity in the equipment. Unless the equipment has become obsolete by the end of the lease, this lack of ownership is a significant disadvantage.
Obligation to pay for entire lease term. You are obligated to make payments for the entire lease period even if you stop using the equipment. Some leases give you the option to cancel the lease if your business changes direction and the equipment you leased is no longer necessary, but large early termination fees always apply.
Ownership and tax breaks make buying business equipment appealing, but high initial costs mean this option isn't for everyone.
Ownership. The most obvious advantage of buying business equipment is that you gain ownership of it. This is especially true when the property has a long useful life and is not likely to become technologically outdated in the near future, such as office furniture or farm machinery.
Tax incentives. Section 179 of the Internal Revenue Code allows you to fully deduct the cost of some newly purchased assets in the first year. In 2012 and 2013, you can deduct up to $500,000 of equipment (subject to a phase-out if you placed more than $2,000,000 of equipment in service in any one year). For example, if you are in the 25% tax bracket and you purchase $100,000 in business equipment this year, the net cost to you is only $75,000.
Possibility of depreciation deduction. Although not all equipment purchases are eligible for Section 179 treatment, you can still receive tax savings for almost any business equipment through depreciation deductions. (Some assets that don't qualify for the Section 179 deduction are real estate, inventory bought for resale, and property bought from a close relative.)
Higher initial expense. For some people, purchasing business equipment may not be an option because the initial cash outlay is too high. Even if you plan to borrow the money and make monthly payments, most banks require a down payment of around 20%. Borrowing money may also tie up lines of credit, and lenders may place restrictions on your future financial operations to ensure that you are able to repay your loan.
Getting stuck with old equipment. Although ownership is perhaps the biggest advantage to buying business equipment, it can also be a disadvantage. If you purchase high-tech equipment, you run the risk that the equipment may become technologically obsolete, and you may be forced to reinvest in new equipment long before you had planned to. Certain business equipment has very little resale value. A computer system that costs $5,000 today, for instance, may be worth only $1,000 or less three years from now.
When deciding whether to buy or lease a particular piece of business equipment, try to figure out the approximate net cost of that asset. Be sure to factor in tax breaks and resale value when making this calculation. After determining which option is more cost-effective, consider other intangibles such as the possibility that the product will become obsolete (if you are considering purchasing) or that your need for the product will expire before the lease does (if you are considering leasing).
If you are considering a car lease, see Leasing a Car to learn about the advantages and disadvantages of car leasing.
For all the practical and legal information you need for your small business, get the Legal Guide for Starting & Running a Small Business, by Fred S. Steingold (Nolo).
]]>When most people think about letting the world know about their business, they imagine a clever ad. But advertising is one of the most expensive and least effective forms of marketing. After all, why broadcast your message to many uninterested members of the public, when you can address people who have a demonstrated interest in what you do, merely by creating a strong referral system?
To begin learning how to market your business effectively, check out this list of tactics.
1. Make it look good. Creating a solid, strong physical impression lends credibility to your business and invites customers in, whether you have a store front, a brochure, or a website. You'll want to suit your look to the type of business you have. An accountant's office should be well-organized and tastefully decorated with business furniture. A dog groomer might choose a whimsical design with bright colors and fun murals on the wall.
2. Create a website. A simple website is relatively inexpensive and can work wonders in terms of drawing people to your business or telling them more about who you are and what you do. Be sure to create a professional look and feel, one that suits your business, and take care to optimize your site for search engines. For more information, see Get Your Business Online.
3. Create straightforward, easy-to-understand pricing. You'd be surprised how many businesses use a complicated pricing structure -- and try to hide their prices from their customers. Streamline your pricing and make it clear, especially if you run a service business. Exactly how much can your customers expect to pay for which services? A pricing menu is often a good idea.
4. Encourage personal recommendations. The single best way to get new customers is through personal recommendations. Why? Because almost nothing is as powerful as an endorsement from a friend or relative (and because it's free). Or you can consider rewarding customers for referrals. For example, a hairdresser might give a client who has referred a friend half off her next cut. For more ideas on attracting customers, see A Marketing Strategy for Every Business.
5. Maintain good employee relations. The people who work for you can be strong assets to your marketing strategy. Employees who love their jobs and believe in your business will not only display/wear/use your merchandise or services, they will also recommend you to their friends and families. Treat them right, and they could be the foundation of your personal recommendations web.
6. Use the press. It always helps to get a little PR -- and you don't need to hire an expensive firm to do it. If you can come up with a newsworthy angle on your business (for instance, your grand opening, your "story," what you offer that's different), you can write a simple press release and send it to local publications.
7. Do a referral exchange. If there's a related business you find yourself referring clients to, or have a business referring clients to you, set up an exchange. Place brochures or cards at the other business's office (or store), and display their marketing materials in your place of business. Examples of successful referral exchanges are those between chiropractors and massage therapists, dentists and orthodontists, and financial planners and tax preparers.
8. List creatively and widely. Unlike advertising, listing your business is usually low-cost or free, and it's a great way to draw people to your business. Make sure to list in the obvious places, such as the Yellow Pages and Chamber of Commerce, and find some not-so-obvious places to list as well. For example, does your city have a website where parents make referrals about services for their children? Does a nonprofit organization in your area have a listing of businesses with good environmental and social practices? Get on as many lists as you can.
9. Maintain a customer database. A customer who used your business once will likely use it again (assuming that the customer had a good experience). Keeping an existing customer database to mail or email promotions to is much less expensive than acquiring a new one. Maintain a database with your customers' contact information, and ask customers whether they'd like to be on your mailing list to receive special offers. A direct mail campaign is much more successful when targeted to existing customers who have opted in to the mailing list.
10. Make a marketing plan. Draw up a marketing plan. A formal plan should outline your mission, and include an analysis of your market and your competitors, your marketing objectives, and marketing ideas: How do you intend to market your business? Will you use a referral program? A website? Issue press releases? Also, outline your marketing budget, set specific performance goals, and determine how and when you'll meet them. Check back regularly to track your progress.
For a guide to marketing your business creatively, see Marketing without Advertising: Easy Ways to Build a Business Your Customers Will Love & Recommend, by Michael Phillips and Salli Rasberry (Nolo).
]]>These are sales made directly to the public, whether at a storefront, a crafts fair, open studio, or as the result of a special order. Such sales are often the bread and butter of small businesses. If you're selling retail, you need to decide:
In a wholesale transaction, you sell quantities of your work to a dealer or retailer, usually at a discount. You get a higher volume of business and your buyer gets a discount. That person then resells your work to their clients. Wholesale transactions can take place at craft shows, directly between galleries and artists, or sometimes with the aid of agents.
A wholesale order can be exciting but you need to think through the terms before you accept it. Items to consider:
A consignment occurs when you provide work to a reseller (the "consignee"), who agrees to pay you proceeds from the sales minus a commission. If your product doesn't sell, the consignee can return it. Under this arrangement, the consignee takes very little risk because it doesn't have to purchase goods. The advantage to you is that it provides access to sales outlets that might not otherwise be open to you.
Consignment sales can be big business. In craft sales alone, consignments account for more than $3 billion annually in the United States. These numbers can be exciting, but before you jump into consignment sales, you should consider:
No matter what you sell, you may have problems collecting what you are owed. The best way to avoid problems is to minimize them up front with good policies and by carefully offering credit on larger orders. If you have a client who does not pay and you can't work out a plan, you have several collections options:
Take care of the legal and business side of things now, so you can focus on creating your crafts. Get The Craft Artist's Legal Guide by Rich Stim (Nolo).
]]>Hundreds of cases have been brought under consumer protection laws, including these:
To avoid these types of lawsuits you need to know the details of your state's consumer protection laws and tell your employees about practices that could get you in trouble. These state laws often allow a customer to sue even if the violation was not intentional.
Most consumer protection laws contain a broad prohibition on "unfair or deceptive practices." In addition, many statutes list specific practices that are forbidden, such as deceptive advertising and pricing, discussed below.
Under both federal and state law, an ad is unlawful if it tends to mislead or deceive, even if it doesn't actually fool anyone. If your ad is deceptive, you'll face legal problems whether you intended to mislead the customer or not. What counts is the overall impression created by the ad -- not the technical truthfulness of the individual parts.
Over the years, the Federal Trade Commission (FTC) has taken action against many businesses accused of engaging in false and deceptive advertising. If FTC investigators are convinced that an ad violates the law, they can do all of the following:
Consumers often have the right to sue advertisers under state consumer protection laws. For example, someone who buys a product relying on a deceptive ad might sue in small claims court for a refund or join others (sometimes tens of thousands of others) to sue for a huge sum in another court.
The two pricing practices most likely to get your business into trouble are: making incorrect price comparisons with other merchants or with your own "regular" prices, or offering something that is supposedly "free" but in fact has a cost.
Offering a reduction from your usual selling price is a common sales technique. But the reduced price is misleading unless the former price is the actual, bona fide price at which you offered the article. For example, if you announce a new product for $129, but sell it to wholesalers as if it were a $79 product, and similarly discount it to direct customers, the $129 price never really existed -- and you have broken the law. It misleads customers into thinking they are receiving a discount.
It's even more blatant to buy a special batch of merchandise especially for a sale and create a fictional "regular" price or one you adhered to for only a day or two. Some merchants are tempted to do this when they buy seconds or discontinued product lines at a deep discount and want to pretend customers are getting a bargain.
If your ad compares your price with what other merchants are charging for the same product, be sure of two things:
In other words, make sure that the higher comparison price isn't an isolated or unrepresentative price.
Regarding offers of "free" products or services, you can offer gifts only if there are no strings attached. For example, if you offer a free paintbrush to anyone who buys a can of paint for $14.95, the brush really isn't free if you:
Consumer protection laws place a potent weapon in the hands of buyers -- punitive damages. In an ordinary lawsuit, a plaintiff can recover only his or her actual losses. But many consumer protection laws allow consumers to ask for additional penalties -- which can drastically increase the damage award, sometimes to triple or more of the amount of actual damage. In addition, these laws often require the defendant to pay for the consumer's attorneys' fees. The potential for large verdicts gives buyers and their lawyers an incentive to sue if it looks like a law has been violated.
You can find out more about consumer protection laws by contacting the Federal Trade Commission (www.ftc.gov), 600 Pennsylvania Avenue NW, Washington, DC 20850, 877-FTC-HELP (382-4357), and by contacting your state's consumer protection agency.
To learn more about legal issues affecting your small business, see Legal Guide to Starting & Running a Small Business, by Fred S. Steingold (Nolo).
]]>It is often overwhelming for a small business to come up with the time, money, and expertise to cope with a relatively minor dispute through legal means. What's more, unless the situation is resolved amicably, the leftover hostility could affect a small business owner's quality of life -- it can be unpleasant to bump up against an unfriendly party on a day-to-day basis.
Mediation is an efficient and effective way to resolve disputes and build community among small business people and their customers and neighbors.
Mediation offers another way to resolve conflict -- one that can help you and the other party come to a genuine understanding and find a resolution that addresses both of your needs and interests. In mediation, a neutral third person -- the mediator -- meets with parties who are having a conflict to help them try to work it out together. Because you and the other party make the agreement together, you are both more likely to keep it. Also, the process of working things out in mediation is an experience you and the other party can draw upon if you run into problems again in the future.
For more on mediation, see Nolo's Mediation Resource Center.
Mediation is usually much less expensive than hiring a lawyer. Community mediation centers offer low-cost services, and even if you hire a private mediator who charges by the hour, you'll be sharing the cost with the other party instead of paying a lawyer on your own. Mediation also works more quickly -- it usually only lasts a few hours, compared to the many hours a lawyer would spend preparing your case and arguing with the other side.
If you think you might want to mediate a dispute, the first step is to find a mediator or mediation service. Lots of places have community mediation centers that use volunteer mediators and offer very low-cost mediation services. Look in your local phone book under "mediation" or "conflict resolution." That's also where you'll find private mediators. Some mediators are lawyers, so you can also look under "attorneys" if you want to use a lawyer-mediator.
If you belong to a small business association like a chamber of commerce or the Better Business Bureau, check to see whether they have a mediation program tailored to small businesses -- many of them do.
For more on finding a good mediator, see Mediation FAQ.
The vast majority of mediations result in a settlement. If your mediation is successful, you'll leave with a signed agreement or, at the very least, a signed memorandum setting out what you and the other party have agreed to. You have the choice of making the agreement enforceable in court or not -- many people want to be able to ask a judge to enforce the settlement in the future if the other party doesn't live up to the agreement.
If you don't reach a resolution in mediation, you haven't lost anything. If nothing else, you've probably learned a lot about how the other person sees the problem. You still have the option of taking legal action if that's what you feel you need to do.
If you are ready to use mediation, or just want to learn more about it, read Nolo's eBook Mediate, Don't Litigate, by Peter Lovenheim and Lisa Guerin.
]]>Having a clear vision of your expected customer base will increase your business' chances of success. By defining your target customers you can:
Defining a target market will not limit your business. New entrepreneurs sometimes resist defining a target customer base, thinking it might limit the business or reduce the number of potential customers. This is a misconception. Identifying target customers does not prevent your business from accepting customers that don't fit the target profile. If such a customer seeks your product or service, you will still be available.
Defining a target market will increase cost efficiency. Defining a target customer base increases your cost efficiency. Unless you have unlimited marketing resources, it's much more effective to focus your marketing efforts on potential customers who you have determined are likely to buy your product or service -- rather than wasting time and money courting the vast world of prospects who merely could become customers.
In a nutshell, defining your target customers means identifying the specific characteristics of the people or businesses who you believe are most likely to buy your product or service. These characteristics are sometimes called a demographic profile. Common characteristics used to classify customers include:
Create a customer profile. Use these criteria to draw a profile of your most promising potential customers -- those who have a real need or desire for your products or services. A maternity store specializing in professional wear, for example, may identify its target customers as 25- to 40-year-old pregnant, married women in the legal, financial, and real estate industries, within a ten-mile radius of the store. A bike shop with a focus on single-track mountain biking gear might define its target customers as 18- to 25-year-old single males living within two miles of the local university.
Be specific. Deciding how narrowly to define your target customer is more of an art than a science, but in general, you should err on the side of being specific. Business owners often make the mistake of defining their customer base too broadly, making it very difficult to engage in effective marketing efforts. Remember: A solid definition of your target customer serves as a foundation for all your marketing activities. The more carefully you've defined your target market, the more likely your marketing efforts -- even simple, low-cost methods -- will bear fruit.
Some businesses focus on selling to other businesses rather than to individuals. Selling products or services to other businesses (sometimes called B2B, for "business to business") can be lucrative because businesses usually buy in larger quantities than individuals. For example, a soap manufacturer might sell 50 bars of soap to individual customers via its website in a given month, but could sell 500 bars in just one sale to a hotel.
If your business is targeting other businesses, you should still define your target customer, using characteristics such as:
The term "niche" refers to a relatively narrow or specialized market; for example, a maternity clothing boutique specializing in corporate/professional wear or a law firm that specializes in immigration cases. In a crowded marketplace, a niche serves the critical function of distinguishing you from your competitors.
Focusing on a niche can be an effective and profitable strategy for small businesses because it is often too difficult and costly to try to cater to very broad audiences. Instead of trying to appeal to everyone, a small business often does better by developing a specialty in an area that is not being fully served by other businesses and exploiting that niche with cost-effective marketing strategies. Think of a niche as a hook that will help you reel in the potential customers that you have identified as the most profitable and likely prospects for your business.
Niches are usually defined as either operational or customer focused.
Operational niche. With this approach, the business focuses on specialized products or services that will inherently appeal to a narrow customer segment.
Customer niche. This approach focuses on one or more specific -- and profitable -- customer bases. Instead of emphasizing customized products or services, the business focuses on tailoring its marketing efforts to specific audiences.
Both approaches are effective, and businesses commonly use a little of each. For example, a day spa may define a customer niche of tour group companies and travel agents and actively market to them. At the same time, it may make small operational tweaks to cater to this customer niche, such as offering a free shuttle service to local hotels or including maps of local tourist attractions in its lobby area.
Niches are by definition narrow, but not so narrow that they don't contain enough customers to sustain the business. The key to defining a profitable niche is to find an area where there is an unmet demand, and to fill that need with your products or services.
In order for your business to succeed, use a circular process when defining your target customers and learning about your market. Here's how it works:
Typically, you start by identifying your best customer prospects based on your observations and intuition about your market (remember, your market includes not only customers, but also your competition and industry). Next, you do research to learn more about your market, such as what your target customers' buying habits are, what your competition is doing, or whether there are important industry trends. (To learn how to do this, see Nolo's article Doing Market Research.)
Based on this research, take another look at how you define your target customer and your overall business idea. If necessary, given the new information, make changes to your target market or niche in order to make the most of an unmet demand in the market.
This cycle shouldn't end when your business gets going. Learning about your market and adjusting your business plan accordingly is an ongoing process -- indeed, it is the heart of successfully running a business. Smart business owners constantly monitor market conditions and make adjustments to their businesses in order to stay profitable.
To learn more about defining target markets and niches, and using those profiles to help your business succeed, get The Small Business Start-Up Kit: A Step-by-Step Legal Guide, by Peri H. Pakroo (Nolo).
]]>