In Part 2 of our Closed Loop series, we talked about the need to do more than just find customers. The key is to find customers with the right value in order to align your spend accordingly. To do that, it requires an understanding of their preferences so that you can target and personalize marketing initiatives that will drive conversion and growth.
But inevitably the question comes as to how a marketer or business finds the “right” customers without stretching their financial parameters? The answer lies in a careful analysis of the data collected from the entire consumer interaction with your brand, from initial impression to sale to post-order actions. And just as a consumer is going to respond to a very targeted and relevant message, your media budget needs to be as targeted, optimized and scaled to the value of the outcome (sale or customer)—not the cost of the media (CPM, CPM, CPX).
Accomplishing this requires you to evaluate your media buy as you would a portfolio of stocks. You want to make sure you are investing in the most consistent performers, be that paid search, mobile ads, display media, or even your company’s own blog. But then it is important to go deeper into each unique action driven from these channels—all the way to a sale or customer—so you can use that data to refine your spend at the most finite level possible. The reality is that consumers don’t think or act by channel—neither should you. The more focused you can be on the value of the outcome, not just the cost of the buy, the greater success you will have in growing your business efficiently.
The below chart provides a simplified view of how different value segments existed for a client of ours. Previously, they made channel-level decisions of how to spend their media, based on cost. When we essentially inverted that approach by making value-level decisions, we were able to reduce their costs on their existing buys and then reinvest into higher cost media that was previously unattainable.
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Buying media/distribution in this way requires a constant balance of volume, quality and cost. Marketers don’t want to sacrifice cost for volume—buying share inefficiently may work to provide a short-term life, but it’s usually not a good, sustainable growth strategy. Conversely, focusing too narrowly on an average cost metric could reduce the number of media/distribution channels a marketer is able to utilize, thus shrinking the prospective prospect base and slowing market share growth.
It is critical to know where your tolerances are across the volume, quality and cost metrics so you can determine which lever to pull based on your business needs. Especially in the digital space, the market moves so quickly that not having these baseline metrics, shifts in media costs, placements, click and/or conversion rates can kill your budget and limit your growth.
In the next post, we’ll talk about going beyond interactions that lead to sale and finding which metrics hold true insights to drive business growth.
Have an idea we didn’t include? Get in touch and let us know what else you’d like
