Advice from Jason Lark, Managing Director at data marketing agency, Celerity…
From primitive text-posts on forums to the first clickable banner ad in October 1994, people have been advertising on the internet for as long as it has existed. Since those humble roots, however, digital advertising and marketing has developed into a multibillion-dollar industry. In Britain alone, according to the Advertising Association/WARC quarterly Expenditure Report, ad spend is set to grow to £24.6bn in 2019, representing a 4.6% increase over last year.
Marking 23 consecutive quarters of market growth, ad spend in the first quarter of 2019 increased 4.2% year-on-year and reached £6.0bn. That quarter includes the original scheduled date of Brexit, suggesting that at least the online ad market is undeterred by uncertainty. Further still, the UK ad market is expected to grow another 5.3% in 2020.
The only way to increase ROI?
With all this money flying around, you could easily fall victim to the mistaken belief that increased advertising expenditure is the only way to increase ROI. In truth, the key to competing is not to throw more money at it in fear of being left behind, but to utilise the resources you already have more effectively and to spend what money you currently spend more wisely.
In many cases, the solution is not more cash but something nearly as precious: customer data. As consumers demand personalised brand experiences, data-driven strategies are winning out as the best way to increase leads and improve ROI.
There are three main factors to consider when implementing this strategy.
Understand what makes them click
Understanding customer behaviour is the foundation of advertising. Knowing who your customers are, how they interact with and perceive the brand, and their likes and dislikes are all critical, but the most vital data point is what makes them convert.
The data you already have, such as email subscriber preference centre information, website analytics, and online point-of-sale statistics, is often plenty to draw actionable conclusions and better target your marketing communications. While data modelling and programmatic algorithms have their place, it is good, old-fashioned website conversion analysis which is the best tool for this job.
Takeaway: study the last thing they did before they converted. How can you use that information to sell more to a lookalike audience?
Choose customers that count
What about customers who aren’t sure what they want? Some of them will return once they know what they’re looking for, others will decide they’re not interested. In both cases, you are best served spending your time and money further down the sales funnel. Separating browsers from buyers lets you focus your marketing efforts to give you a better chance of maximising ROI. Segmenting your data to identify the most and least profitable customers and then directing your entire marketing budget at the former can produce tremendous results at no additional expense. It’s much more prudent to apply a rational strategy like this than getting involved in an advertising investment brawl with your competition – even if you can justify the expenditure.
Takeaway: review your email campaigns. What’s the difference between what you send prospects versus what you send to existing customers? Is there a difference? Do you understand the buying habits of your most profitable customers? Have you ever focussed on them?
Invest in performance
Paying close attention to customer retention and its associated metrics is really important. In fact, market research shows that acquiring a new customer can cost four times as much as upselling a current customer. Therefore, the more customers you’re able to retain and sell to, the more likely you are to achieve your sales goals.
To improve customer retention, you’ll need to focus on metrics like loyalty and customer satisfaction. The ability to identify, track, and sell more to the customers who are most committed to your company is the best way to ensure that you establish the long-term revenue sources you need to grow.
This isn’t to say that there’s no opportunity to grow your business, but rather to suggest that a focus on retention is the priority. Besides, while you focus on establishing a stable company with long-term customers, those same customers will continue to expand your clientele by word of mouth.
Takeaway: plan marketing specifically for loyal customers – they are your most powerful sales tools.
Act on data you already collect
Save your money; it’s possible to improve your ROI by acting on the data you already collect. If a wholesale focus on customer retention feels too daunting, begin that journey with a few small steps. Start tracking basic conversion and happiness metrics, and before you know it, you’ll be well on your way.