What is the most effective way to market a Local Small Business?

We have successfully launched a small business providing services locally in a couple cities. Uptake of new clients has been slow and we want to spend some of our (limited!) cash to market the business.

We're already networking locally, hanging flyers in some targeted locations, taking advantage of online free listings (local.google.com, yelp.com, etc), and working on SEO (we're getting up there for our keywords).

If we were to invest some cash, where would our dollars be spent most effectively and successfully?

• Direct mail - targeting the right demographic in the cities we service
• Yelp Ads targeting users with intention (i.e. searching for our service in a city we service)
• Search Engine advertising (Google AdWords, Bing/Yahoo ads, etc)
• Coupon mailer
• Other?

I think you're best bet is to think of an inbound-type product you can give to small businesses that is spreadable and free, and invest some development money into that. An example is the HubSpot Grader suite. I've repeatdely heard them say they get more leaders from website.grader.com than any other source.

The nice thing about inbound tools is that you invest the money once, and you keep getting leads. It's a gift that keeps on giving.

I'll focus my answer more on practical, start-today kind of advice.

I would suggest you start off using all the FREE methods you can find - I'll list a few such methods:

1. Vistaprint offer printing promotions if you sign up to their newsletter - just wait a day or two and you'll start receiving e-mails offering you free flyers, business cards, banners and whatever else you can imagine printing on.
2. Google SEO - make sure your site is not just search-engine friendly for the products you sell but also for the location you are in. If people are searching "bakery in London" your SEO should be focussed on both the location and the keywords.
3. Get some free Google AdWords credit - this may require some searching but I am 99% certain that you will find a coupon giving you $50-$100 of free credit to test out Google's PPC platform (Bing might be doing a similar promotion so use them as well).
4. Guerilla marketing - do something awesome and let all the local papers, bloggers, news channels know about it. If you are a baker, make the world's largest muffin or doughnut etc. Be a bit cheeky without breaking the law

That's a start!

With marketing channels consider how each channel will scale, which means after you think about the average cost of customer acquisition be sure to try and calculate the marginal cost of customer acquisition. When you have a feel for shape of the customer acquisition curve, you will know when each marketing channel is reaching a plateau. If you understand these curves, you'll be better informed to know which channel to spend incremental dollars on.

If you are focused on online marketing, make sure you are constantly optimizing your landing page and website. Consider using tools like visualsiteoptimizer.com and optimizely for a/b testing. This is a pretty important part of funnel conversion.

To grow your online funnel, definitely agree with beginning_steps that Google Adwords is a great starting point for direct marketing. I have heard Kenshoo.com is a good tool to help you test.

Also agree with Andy :), hubspot works well - although i thought more oriented towards b2b marketing. other marketing automation tools: eloqua, leadlander, demandbase.

If you are selling b2c, depending on your demographic and service, you might consider angieslist.com as an alternative to yelp. Podcasts can be pretty efficient too.

You can get quick result with Google Adwords and then leading the visitor to a suitably designed landing page from where it can help you to get additional info about the visitors.

Other great way is to attend the local events that are targetted/related to your business vertical

Self promotion: SME Backoffice is a young startup that provides internet marketing and SEO services to help startups and small businesses to reach out to their target audience by utilizing various marketing techniques cost-effectively.