1. Do you have a clearly defined marketing strategy?
Data shows that that two-thirds of businesses do not have an integrated digital marketing strategy. Are you running your digital marketing in the way you should? But let’s say you got the basics right, is there anything about your digital marketing campaign and your digital marketing capability that can truly set you apart from your competitors?
Gone are the days where businesses solely rely on products or services to establish a competitive edge. To compete, to survive, and to thrive, there is a very precise formula that only the leading businesses and brands seem to have figured out better than anyone else. And, it is not rocket science. It’s a large sophisticated dynamic puzzle game that is constantly changing its pieces. To put all the pieces together, you need to be fast. You need to be imaginative, relevant, logical, precise, accurate, and dynamic.
There are numerous technologies, tools, methodologies, and schools of thought in the digital marketing world. Each industry has its own trends and best practices. But unless you are fast and daring enough to continue to adopt, integrate and test out new solutions and strategies, your competitors are catching up and worse, moving ahead of you.
The question all businesses are trying to answer is how much more can we get. How much more margin can we improve. How much more revenues can we bring in. And equally important, how much more can we squeeze out of our digital marketing and our marketing budget.
Arguably one of the biggest areas that businesses spend money on is promoting the business itself. Ironically, many businesses fail to have a properly defined and integrated digital marketing strategy. Are businesses happy to throw money away for the fun of it? Are some of them even aware that they are burning cash day in day out? Or do they not have the in-house or external capability to set a clearly defined and integrated strategy.
Many businesses are committing money on paid, owned, and earned digital traffic. The main challenge they have is how well-planned their approach is. As with any other business area, you need the right strategic direction that aligns your investment with your goals.
So, how do you develop a digital marketing strategy that delivers?
Stages of the Buying Cycle
First, every business needs to have a good grip on their customers’ buying cycle and ascertain where their digital acquisition capability’s strengths and weaknesses lie. On a high level, these are the main steps any buyer goes through before buying anything:
- Awareness: Prospects find out about you through a reach campaign or an ad or even word of mouth
- Interest: Prospects develop a level of interest in what you are offering and you as a business.
- Consideration: A high level of interest where prospects are genuinely considering your product or service.
- Intent: The prospect is engaging with your business and sending buying signals.
- Evaluation: Selection process where prospects are identifying if there are other better alternatives than your business.
- Purchase: Prospects finally decide to make a purchase.
- Advocacy: Building a loyal base of fans and customers that endorse your business and spread positive word of mouth about your brand.
How does your digital marketing map across these stages of the buying cycle? Is there anything you would change to better communicate with your prospects at every stage?
2. Benchmark your digital marketing strategy against competitors
To have a strong digital marketing strategy, it’s quite important to know where your competitors and your industry stand in terms of their digital marketing strategy and acquisition capabilities. How much your competitors spend to acquire new customers or sell to consumers who could potentially be going your way instead, is a valuable piece of information. If your competitors’ acquisition capability and strategy are effective enough that it attracts customers at lower cost (CPA), then they are better positioned to scale and probably have a stronger financial position than you which can impact growth and sustainability down the road.
Your CPA will impact your profit margin but also your ability to scale up and grow. A higher CPA means your profit margin will be less but also your cash flow. Lower cash flow means that you will be less likely able to inject cash into advertising should you wish to grow at a faster rate.
What exactly is CPA? Cost per Acquisition = (Cost of Marketing + Cost of Sales) / Number of Customers. Another way to derive your CPA is to estimate your Marketing performance and factor that by your sales performance. The 1st thing you want to measure is your CPL (Cost per lead).
CPL = Total Cost of Advertising / Number of Leads
Another way to look at it
CPL = CPC / Landing page Conversion Rate
Then you want to factor your CPL by your sales conversion rate.
CPA = CPL / Sales Conversion Rate.
In e-commerce, it is typically one equation
CPA = CPC / Conversion Rate.
Now that you understand these metrics on a high level, you need to start linking this to your financial KPIs. If you are aiming for 25% Gross Profit Margin, and you know that your other total cost is 50%, you then know that your CPA needs to be lower than 25%.
3. Strategic Approach to the digital marketing channel mix
Marketers have a wealth of channels and opportunities to attract more buyers. To come up with the best digital marketing strategy, you should leverage the right mix of digital solutions including social media marketing and pay per click (amongst many others) to find your target audience when and where it matters. Having the right mix is one thing brands need to absolutely get it right when it comes to their digital marketing strategy. The challenge is to find the right formula and fund allocation. Whether it’s programmatic, search marketing, social media, email marketing, messenger marketing or chatbots, you need the right framework. And that depends on your industry, business goals, and competition. A great starting point is to assess where your business stands across all the types of digital media and tools shown in the chart below (Smart Insights).
From there, you want to consider things like are currently more focused on awareness or purchase and, emotional or rational selling. Are you very aggressive in marketing your business? Perhaps you need to invest a bit more in awareness or vice versa.
4. Fully integrated analytics-based decision making
An analytics-based Digital Marketing strategy is guaranteed to be successful if you leverage your data properly. Data is everywhere. Visibility and making sense of data are all on you as a business. Are you accurately attributing performance to your digital channels? Are you tracking visitors’ behaviour and interaction across the board? Are you constantly A/B testing new initiatives and making sound statistical conclusions?