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Keeping Signage at the Top of Business Marketing…And Its Revenue.

on May 15, 2012 in adec electrical, Latest News, Signs

By Thomas James ­ CMO, The LED Sign Company

The hard truth is that signage is not considered by most business development experts as marketing and the reason is clear – they are simply unaware of its value.

The owner and editor of the website above received a one-page letter from me about the value of signage. I got a reply two days later with the following words: “Great information Thomas. You can submit an article at anytime.” I am currently writing that article because just like with the editor (a very respected business marketing expert), education works. And if it causes 1000 people to spend more on signage, great! I want to make the pie larger. Selling bigger and better signs to new businesses is one way; having millions of existing businesses rethink signage is even better.

One of the top small-business-marketing websites, ranked #1 by Forbes Inc., doesn’t even mention signage. At this website alone, tens of thousands of business owners and decision makers learn about marketing… without signage. If that does not upset you, you are not in the sign business. The hard truth is that signage is not considered by most business development experts as marketing and the reason is clear – they are simply unaware of its value.

If the real value of signage were known by a much larger percentage of the business community based on education, research, measurable ROI data and case studies, three things would happen:

  • Billions of dollars would shift from several media types that are, on average, ineffective for the typical organization, chiefly the SMB market;
  • Signage would be elevated to its rightful place with regards to marketing, especially for small businesses that unmistakably depend on their 5-mile target market where up to 85% of their sales come from (SBA);
  • Business consultants, marketing sites, magazines, books, blogs, newspapers, TV and other mediums would finally embrace it as an integral part of overall marketing and include it in their core strategy with regards to business development.

After reviewing the sign industry, I would recommend three items be moved up the ladder of strategic focus. They are:

  • Public and corporate education on the proven effectiveness of signage. This includes the responsibility of creating significant awareness of the position signage has in the overall marketing of a business, especially compared to other high-priced, broad-based media.
  • Centralized learning support for sign companies, specifically involving measurable ROI and how it was achieved throughout the industry, including private, public and association studies and research.
  • Best sales practices and strategies that focus on real value and a clients’ return on investment, rather than the current approach which normally forces the customer to base value on price, causing eroding margins and exhausting quotes.

Currently, this lack of focus is causing enormous economic loss to the trade. Many organizations don’t invest as much on signage as they should and could; the reasons to do are not usually apparent. Are sign companies responsible for educating clients? Sure we are, and we do to some extent. Do we all have the knowledge we need to be the best? No. Do we understand best practices regarding sales? No. Should we incorporate more value and education in our marketing? Yes, because value and education increase sales and margins. The customer’s results create referrals driven by value. Price drops to the 2nd position where it belongs.

For business marketing experts to include signage as a main marketing strategy takes time and effort beyond sign companies themselves. But their advice can and will cause thousands of businesses to position signage as one of the best ways to develop their business, if not put it front and center.

The SBA states that the average business gets up to 50% of sales from signage, 85% from within 5 miles. Highway businesses can acquire up to 95% of sales from signage. This is true despite the fact that more than 75% of all U.S businesses don’t take signage seriously. That would appeal to most business marketing experts, don’t you think? Or maybe a 60-day, 6-inch ad in the local paper or 50 TV spots (which 90% of the viewers will dismiss because your target market isn’t in their neighborhood) are considered to be worth more by marketing experts. How about a complete signage upgrade that will last up to ten years? Are they recommending that?

The U.S. Chamber of Commerce says that those who take signage seriously and make it an integral part of their overall marketing see significantly more revenue than those who don’t. I believe the Chamber uses the words “profound revenue.” Incredible, yet I have never seen that information in any business magazine.

The SBA states that outdoor LED signs increase sales 15%-150% at 10% the cost of other advertising and you pay just once, while focusing on your target market. The sales increase variance is based on choosing the right sign, creating a good messaging strategy, and traffic. Our outdoor LED sign clients average 30-40% in sales increases. Do marketing experts know about this? Many don’t. Maybe they are busy trying to improve subject lines of email campaigns or recommending some $1000 a month web statistics program with 175 reports. Important? Sure it is, but it’s secondary at best.

McDonalds spends around $100K on signage (per location) to sell a $.99 cent hamburger. For those who are not aware, their whole buildings are signs. Yet, the manufactured home dealer with great highway visibility puts up a $300 sign (selling a $75,000 hamburger) and then complains about low customer traffic. The new mortgage lender in town decides that a 2’ x 6’ painted plywood sign will suffice until business gets going; then to help things out they paint interest rates on the windows. Result ­ image ruined. Then there’s the beauty salon that puts a sign up that is flush with the building (90 degrees from traffic) and selects colors that blend right into the surroundings. Or how about the HVAC company on Interstate 5, with 140,000 cars a day, who decides that his name is so important (but no one knows it) that he makes that font 24” and the part about what is does just 4”. Not a single car can notice his trade. I honestly would have turned down the job and told the customer why.

One thing is perfectly clear; signage costs about 10% that of broad-based media such as TV, newspapers, radio and yellow pages, and is usually a one-time investment. An important note is when you are comparing CPM (cost per thousand); you must also note the longevity of the medium. All other media stops as soon as you quit paying for it. The ROI factor of signage is much larger than just the CPM percentage differences and cost. Broad-based media also falls on deaf ears about 90% of the time.

Business owners, marketing experts and the media must become acutely aware of the value signage has. We all must begin working intensely at positioning signage as one of the top five marketing options. Permits and codes are enormously important as well as conventions where serious partnerships develop, but let’s face the facts; the average small business decision maker believes the price of signage, rather than the return on investment is king. This is based on the customer not knowing what signage can and will do for them.

Would a client invest $5000 more if they knew that a bigger or additional sign would increase sales 4%-12% based on a study of 6000 businesses? If the gross sales were currently $100,000 a month, that would mean $48-$144k more a year. Maybe they would invest $20,000 more if they knew the facts. Would they buy an LED sign knowing that they increase sales 15%-150% with an average cost of .25 cents and hour, giving them the ability to advertise products and specials 24/7? Compare that to someone holding a sign on the street for $10 an hour. The focus should be to educate them and make them see signage as an important part of marketing. The decision then becomes…how much I can afford to spend rather than how much I should pay.

About the author: Thomas James is Chief Marketing Officer for The LED Sign Company, a wholesaler of OPTEC LED signs.