Category: Digital

The Role of Process in Digital Marketing

photo of people doing handshakes
Photo by fauxels on Pexels.com

One of the benefits of working as a Digital Marketing consultant is the opportunity it provides of meeting a variety of interesting businesses, people and getting a chance to understand and help solve different problems. Over the past 18 months, I have been fortunate to have got the opportunity to analyse varied businesses and help them with their Digital Marketing and Growth Strategies. It’s been a great learning experience for me as well, trying to understand what could be some of the common reasons and opportunities for all these varied businesses.

There are a few reasons when businesses feel the need for an external consultant when it comes to Digital Marketing:

  • They have an idea and realise they need some expertise in developing an overall digital presence.
  • They have been in business for some time, have some degree of Product Market fit and now realise they need Digital Marketing to grow their business and take it to the next level.
  • They have been doing Digital Marketing for some time and would like an external pair of eyes to help them understand the true performance of their Digital Marketing and drive further efficiencies

One of the key learnings for me so far, having engaged with businesses in all of the above stages, is that, in most cases, the solution lies in the process.

Digital Marketing is a continuously evolving field. Channels come and go, as do tactics. What works well for one business in a particular context might not work for another. But one aspect that has really not changed is that it is a very data-driven field. And that, by necessity, requires businesses to have a strong process orientation to be successful.

What does this mean in practice?

Barriers to entry in Digital Marketing are low and keep dropping all the time, so almost anyone these days can start a Digital Marketing campaign from their computer in about 24 hours (or even less). This makes it very tempting to jump into a specific tactic headlong. However, just because execution is relatively simple and easy does not mean that one should not take the time to think through how one is going to evaluate the performance of their Digital Marketing. And this requires a Digital Marketing framework that includes the objectives, strategy, execution and measurement plan. And the first step in developing this framework is an in-depth understanding of the customer.

Once a business has some strong customer insights is when they can start developing their Digital Marketing strategy – what are the channels to leverage, how does one target the relevant audience, what is the content strategy and, most importantly, what are the measures of success?

The reason I emphasise the process aspect is because, very often, businesses might not have all the insights, or it might be very expensive and time-consuming exercise to get very accurate insights. What I recommend businesses is that it’s fine to not have all the insights, as long as one has put in place a process to gather insights quickly, translate these into hypotheses, create a plan to test these hypotheses, gather and analyse the data as close to real-time as possible and then make changes to their tactics and strategy based on these insights.

The point I want to emphasise is that there is no ‘magic bullet’ solution when it comes to Digital Marketing. Every business is unique. Customers might be common across multiple businesses, but the mindset they are in when it comes to interacting with brands might be very different across different brands. And, therefore, assuming that what works for someone else should work for you can be a dangerous assumption. It is always best to start from first principles, iterate, learn, tweak, learn some more and so on. And one requires a robust process mechanism to ensure that this happens as a matter of principle.

So do you have a process to do the above?

If you would like some help with setting one up, please do get in touch with me. I will be happy to help!

Monday Reads – 10/02

group of people making toast
Photo by fauxels on Pexels.com

A mix of tech, culture and food in this week’s collection:

Tech in 2020: Standing on the Shoulders of Giants – What’s next in the world of tech, not that over 4 billion people have a smartphone? This is the question that tech analysts, Benedict Evans, attempts to answer in this presentation. A data point that was new to me – ‘China and India use more mobile data than the rest of the world combined‘.

Pop Culture’s Rate of Change May Mirror Organic Evolution – A fascinating research that compares the rates of evolution of certain cultural phenomena—pop music, automobiles, medical literature and 19th-century novels—with those of the scarlet tiger moth, the Darwin’s finches of the Galápagos Islands and two other well-studied creatures: a snail and another moth. And the conclusion is that “the evolutionary pace of modern culture is generally the same as that of many animal populations—which is to say, it is a lot slower than people think.

Inside Google’s Efforts to Engineer its Food for Healthiness – Almost everyone knows Google has a tech / data company. And almost everyone with some knowledge of the company would know that it’s very famous for its free food policy. I have been fortunate to have visited a couple of Google offices internationally. Our team would eagerly look forward to these visits as it was an opportunity to have the food there! This is an in-depth look at how Google is applying its famous policy of experimentation to get their employees, especially in the US, to eat healthier. “What Google is attempting here is culture change…And that’s the level we have to reach to transform behaviors and health for a lifetime.”

 

Monday Reads – 03/02

pexels-photo-3626622 (2)
Photo by Daria Shevtsova on Pexels.com

We are into the second month of the new decade already! It’s been an interesting weekend, especially in sports, with the Australian Open Finals and the Super Bowl, not to mention the Six Nations Rugby.

This weeks’ articles focus on culture in tech.

Social Capital in Silicon Valley – A very interesting read on what really makes Silicon Valley the centre of tech innovation and entrepreneurship.  “Silicon Valley works the way it does, as successfully as it does, because it has a rich social contract that governs everyone’s behaviour. Without that social contract, Silicon Valley tech becomes just another industry, or just another bubble.”

Some More Reflections On Silicon Valley – A continuation on the above theme, but a more personal and direct take on the culture in Silicon Valley.

How do Indian entrepreneurs differ from their Silicon Valley counterparts? – India has a much shorter history when it comes to tech start-ups. This article touches upon some of the ways the culture within the Indian start-up ecosystem differs from Silicon Valley’s.

How Startup Culture In India Differs From The U.S. – Some more points of differences.

The Indian Startup Circus – A no-holds-barred look at some of the stuff that does not get discussed much about (at least in public) when it comes to Indian start-up culture.

 

So in how many years does Pop Culture repeat itself?

acoustic amplifier artist audio
Photo by Mike on Pexels.com

One of the ‘truisms’ of pop culture that I grew up accepting was that pop culture fashion reemerges every 20 years. Not that I analysed it or researched it, I just accepted it. One of the reasons could be that, the soundtrack to my growing up years in the 1990s was dominated by bands such as Led Zeppelin who dominated the airwaves in the 1970s. Followed by the sound of grunge music, which again, can be said to be a reinterpretation of the generally angry and pessimistic decade that followed the glorious 60s.

I dropped out of the pop culture bandwagon soon afterwards, when my taste in music settled into the classic rock of the 60’s and 70’s. But I just hung on to this belief as just something that pops out of my consciousness and goes back again.

Finally, today, I decided to do some research into this. Not a lot, just some casual search online (on a Search Engine that was getting popular 20 years ago). And, not really surprisingly, found that there is no real consensus on this topic. This article, one of the first I came across, perfectly encapsulates this uncertainty.

Digging further, another article confidently put it down as 30 years, backing it up with some interesting analysis. But hold on, it’s not 30, but 40, states this article with references to ‘Mad Men’ and other examples.

One thing of which there can be no doubt is that we are now living in the Digital Age. With attention spans getting shorter and shorter, this article puts out an interesting hypothesis. The age of 20 year cycles might be over, to be replaced by shorter, possibly 10 year cycles.

So what started out just as an exercise in curiosity turned into something more thought-provoking? Will the 20 (or 30, or 40) year cycle continue to hold true for future generations? Or would the rapid and on-going lifestyle changes, driven by the digital revolution, mean that cultural trends are going to be more unpredictable going forward? Just another of the glorious uncertainties of this Information Age that we are fortunate to be living in!  

What is your Customer Life Time Value?

numbers money calculating calculation
Photo by Breakingpic on Pexels.com

Life Time Value, or LTV, is one of the most important metrics when it comes to any business, but especially for an online business. It is, therefore, a big surprise for me that few companies that I have been associated with use this metric actively when it comes to managing their business.

LTV simply measures the value of a customer to your business. To calculate it, you need to have an understanding of how long can you get some revenue from your customer (the Life Time) and the total revenue you can receive from the customer during that period of time (the Value).

Let’s take an example. Let’s assume that the average customer purchases from your site for a period of 2 years, and makes purchases worth Rs. 2,500 in the first year and Rs. 1,000 in the second. Let’s also assume that you make a flat 20% margin on the sales.

So, in this case, the two-year LTV of your customers would be Rs. 500 (Rs. 2,500 * 20%) + Rs. 200 (Rs. 1,000 * 20%) = Rs. 700.

This means that, on an average, you make Rs. 700 from every customer you acquire.

An immediate application of this is that you now have a target for your Customer Acquisition Cost (CAC). If you wish to make a profit from every customer you acquire, then you cannot spend more than Rs. 700 to acquire a customer. Or, if you wish to make a profit of Rs. 200 per customer, then your CAC has to be less than Rs. 500.

Given the challenges with multi-channel and multi-device attribution, in my opinion, Customer Acquisition Cost, or CAC, should be the primary metric driving customer acquisition. However, I find very businesses adopting this, but that is a topic for another article!

Understanding LTV at an individual customer level also helps businesses create a highly targeted Customer Relationship Management strategy. One can create segments of users based on their relationship to the standard or expected Lifetime purchase behaviour and craft tailored messages, including offers, to those users who might be below the average LTV. Similarly, users with high LTV can be identified and developed as potential promoters / influencers.

So why do very few businesses adopt this key metric?

In my opinion, these are some of the challenges:

  • Lack of awareness and understanding of the metric – In general, most people are comfortable with pure transactional metrics. How many customers, sales, revenue did we make? And how much did we spend to make this sales? LTV, by definition, is a long-term metric. A business might only make profits from acquired customers after 6 months, 1 year or longer.
  • LTV is not a leading metric – As I mentioned previously, LTV is a long-term metric. For a new business, it might take up to a couple of years before they can realistically calculate their LTV. In the interim, they rely on more immediate (or leading) metrics to measure and run their business. And once they get comfortable with this, there is a natural and understandable reluctance to shift to another metric.
  • Lack of appropriate measurement for channel of customer acquisition – Measuring visits and conversions from a marketing channel is pretty straight-forward. However, tracking of new customer acquisition is a slightly trickier exercise. It typically requires some additional technical requirements to map a new customer back to the channel (either first or last) that led to that customer visiting your site and making their first purchase.
  • It takes time and effort to move the LTV needle – By it’s very nature, it takes a lot of time and sustained effort to move the needle when it comes to LTV. So, any business that wants to work with this metric would typically have to look at some element of the metric where short term movements are visible. For example, it could be one cohort of users, or a specific period in the Life Time, as opposed to the full LTV. As you can imagine, this brings in a degree of complexity from an analytics perspective that many businesses might not be resourced effectively for.
  • Team structures and goals – LTV is a difficult metric to break down for the various teams that are directly responsible for it. Many marketing teams are still structured on a channel basis. And it can be difficult to translate the LTV goal into an effective metric that operations and delivery teams can manage to.

Despite these challenges, I believe that every organisation, especially digital native ones, should have Life Time Value (LTV) as one of the key metrics that they measure and grow. It can provide both strategic as well as tactical insights that can prove very useful to scale their business in a sustainable manner.