It’s impossible to be an expert on every available digital marketing tactic, let alone the new ones that spring up each month. Marketers respond by either buying the skills we need from specialized consultants or building the knowledge in-house and trying to learn everything necessary to make wise marketing decisions.
Whether you buy or build your marketing knowledge, the question of how to allocate your budget and time for every digital marketing tactic can be overwhelming. Here’s a framework for how to address this question, a checklist of marketing exercises that can extract clarity from the often-confusing landscape of marketing decisions.
In recent times, market research was expensive and time-consuming to set up, execute and analyze. It was thus avoided or done infrequently. Online research methods save time and money, and it’s easier than ever to conduct research to understand your shoppers.
You can glean insights on potential customers from resources such as your website’s analytics, online tools that monitor your company in social media, fan interactions on your Facebook page and online user testing sites such as UserTesting.com. The first three are free and easy to access, and the last one can cost as low as $30 and deliver helpful marketing insights in under an hour.
Now that you have a better understanding of how your prospects behave online and what they think of your company, it’s time to identify how much your customers are worth to your business, aka your customer lifetime value. The data to calculate this useful decision-making metric likely is already available, but just needs to be assembled in one place.
Calculate this metric using your customers’ average spend per month, their actual or expected number of months as a customer, and any other benefits they provide for your company, such as referrals. For more precision, adjust this metric downward by the average cost to maintain your customers, such as costs for customer service.
Your new metric now will help you identify how much money and time you should spend to acquire a new customer.
Next, focus on making improvements to your main website. For most businesses, the website is tightly integrated into almost every online and offline marketing campaign. Making a few small changes here, such as improving your campaign landing pages, adding more calls to action, or making forms easier to complete, can improve the ROI of your other digital marketing efforts very quickly, without even needing to touch them.
At this point, it’s tempting to turn your attention to the digital tactics driving traffic to your website or business. Before you do, devise a plan to build your database of personally addressable prospects.
Direct channels can provide better ROI by allowing you to selectively target high-value people, personalize their messages and offers, measure their individual response and contact them without having to buy new media. Create marketing campaigns and promotions that will drive potential customers into your database of email addresses and mobile phone numbers.
Another often-overlooked tactic is customer referrals. If done correctly, it can inexpensively generate new leads that have a higher likelihood of converting to customers, given their personal recommendation. Many companies create simple online programs on their website or Facebook page to reward customers with promo codes for each referral that becomes a customer.
At this point, you should be feeling pretty good about your progress. You know the value of a customer, have optimized your website for conversions, begun building a database of emails and mobile phone numbers, and are focused on referrals from satisfied customers. Now it’s time to focus on your media channels.
Start by looking for opportunities to improve performance in your paid channels first (such as pay-per-click search marketing, online display ads, paid listings on directory websites, etc.) to save money as fast as possible. Then turn your attention to your nonpaid sources of online sales (such as e-newsletter, search engine rankings, and social media).
In both of these channels, use your Customer Lifetime Value metric to evaluate the correct amount of spend to acquire a new shopper. Make sure your tactics are helping build your email and mobile phone database, and are encouraging satisfied customers to send you new business. Last, work hard to find benchmarks of advertising performance for your industry and make improvements until you exceed those benchmarks.
A common temptation in digital marketing is to look to paid media first to generate new sales. The list of digital marketing priorities above illustrates that marketers should consider often-overlooked but more effective tactics before they begin paying for new business. These tactics provide a very high return on your marketing investment and also will help your business stand out from the countless other companies marketing to your consumers.
Note: this posting originally appeared in my column on Digital Marketing in the Denver Business Journal on April 22, 2013. See full list of my DBJ articles on digital marketing.