Several years ago when I was attending business school, my marketing professor tried to convince us that sales is sales and marketing is marketing. Both are different, he argued! But are they?
Being a marketer, I knew something was fishy in what he said. Can it be that marketers who produce flashy banners are in charge of the brand and positioning but not in charge of the bottom line?
Unfortunately in many companies today (more in the B2B offline), this is still the case. Marketers are in charge of marketing, and sales is in charge of sales.
In my opinion, marketers are the superheroes of the digital space, and are essentially the sales force responsible for revenue. If it’s not the case in your company, I very much suggest that you start measuring your contribution by the dollars produced from each marketing activity.
The world of digital marketing is getting more complex with an increasing number of channels (Web, email, social, mobile) and customers and prospects are broken down into small communities in different channels. For example, they move from Facebook to smaller and more intimate communities such as technologies like WhatsApp, Vine, WeChat, Snapchat, and many others. In short, the job of a digital marketer is ever-challenging.
Sometimes the focus is directed too much toward the channels and much attention is given to seeing what’s new out there and making sure we’re reaching out to customers and prospects in all channels without real objectives behind what we want to do with the clients. Does an increase in followers equal success? Does it translate to revenue?
Rule #1: Channels are channels and not objectives. They’re there to facilitate customer engagement while linking it to our (often quantifiable) objectives as digital marketers.
Then, what are the objectives, you most probably ask?
There are three strategic objectives that digital marketers need to set and measure in order to generate revenue.
- Convert leads into buying customers
- Increase the lifetime value (LTV) of your customers
- Win back inactive and lost customers
Let’s look at the customer lifecycle and its journey from a lead to a churning customer. The chart above explains the journey visually, and thus the strategic objectives:
1. Convert Leads to Customers
Most of the budget we invest in digital is directed toward acquisition strategies such as SEO, pay-per-click (PPC), Facebook ads, banners, affiliation, etc. The true objective is to take the leads we invest so much money in and convert them into buying customers.
We need to measure how much money we spend on each channel against the conversions we have. If we don’t do that, then our acquisition strategy is merely a hobby. Assigning monetary values to each channel and looking into conversions is often called attribution. We want to measure the increase in conversions against our actions while assigning desirable targets. For example, 20 percent of my leads are converted into buyers each month.
2. Increase LTV
Given the investment we’ve made in acquiring the customers, every sale we will have from now on will yield larger gross margins (the purchase cost doesn’t include the acquisition costs anymore). And hence what we want to do here is look into the increase of the spend from our existing clients and make sure they are retained. Here you need to look into increase in the average purchase from your clients, and increase in their engagement metrics (more visits, increased time on site, review of products, etc).
3. Win Back
The third and last objective is to try to pull back the customers who churned or are inactive toward the center of the customer lifecycle, so that the pool of customers we have will churn in a slower pace. (Twist it, turn it, customers will always churn. The best you can do is to delay their churn.)
I am not going into the tactics used, but looking at the strategy – you want to measure win-back ratios (churning customers – churning customers who purchased again) and work against improving this number.
It doesn’t really matter what type of business and industry you’re working in. The job of the digital marketer is sales, and by sticking to these objectives and measuring against them we’re ensuring our efforts are directed toward the bottom line. You can now look at different channels, campaigns, etc., but make sure that everything you do is attributed to one of these goals.
And as soon as you can quantify success in these objectives to your efforts, see your boss and ask for a pay increase.
Until next time, stay tuned.