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These four proven strategies can transform your marketing efforts into the fuel needed for your business’s long-term economic recovery.
No question that 2020 has been a strange year. For many, life has been stuck in a precarious and unsettling holding pattern for months. Although there’s a lot of talk—and even a glimmer of hope—about economic recovery on the horizon, there’s still a lot of uncertainty swirling around. And this uncertainty leads to cautiousness around future marketing plans.
However, we know that every company needs growth to either return or resume as soon as possible. Really soon. Marketing will undoubtedly play a critical role in making this happen. That’s why this is not the time to “play it safe” and sit on your plans. When executed effectively and strategically, marketing can be your secret weapon for driving measurable and sustainable business growth—now and well after this health and economic crisis has finally subsided.
You can’t pull the plug on marketing forever
Unfortunately, from a marketer’s standpoint, there’s no clear-cut playbook for how to rebound in the face of a continuing health and economic crisis.
For starters, short-term panic was reason enough for many companies to put an instant pause on marketing investment at the onset of the pandemic. After all, no one could really predict how the crisis would evolve or rally on. Why invest valuable marketing dollars to court potential customers when unemployment claims skyrocketed and the spending ability of millions of Americans suddenly got slashed over night?
Situations like this make assessing future demand, managing your supply chain, and determining the right way to measure the financial health of your business really difficult.
But marketing, just like life as we once knew it, can’t be put on hold forever. In fact, as businesses begin to reimagine what the future state of their operations looks like, they must lean into marketing more than ever before to stay top-of-mind and remain relevant with customers as the economy, slowly but surely, rebounds.
This is the time for marketers to focus on impact: making the smartest bets on what marketing tactics will drive the greatest business value from now through full economic recovery.
And while there’s no hard-and-fast way to navigate the current crisis, here are four key principles I’ve found useful for businesses looking to grow their way out of a pickle:
1. Dead spend will always be dead
This isn’t new news. In fact, you should have been regularly eliminating your dead weight already. Marketing budgets are a precious commodity—even when the economy is flying sky high. But given the current circumstances, you really have zero room to waste. Every dollar you spend on marketing needs to make a meaningful impact.
At LQ Digital, we refer to “dead spend” as anything—programs, keywords, campaigns—that deliver little to no results deeper down the funnel. We’re not simply talking about leads here. If these tactics didn’t deliver legitimate pipeline opportunities that eventually converted into real transactions, you should consider them dead.
I know, this approach may sound ruthless. However, by leading the charge across your team to stay hyper-focused on performance at all times—which, in turn, will automatically optimize your marketing spend—you’ll win a lot of credibility and respect from the people within the C-suite.
The truth is businesses today are watching over budgets like hawks. While there may have been some “wiggle room” in the past to test new ideas or put in the effort (and budget) to refine and optimize under-performing campaigns, that luxury is no longer part of today’s reality. Every dollar spent must drive value. Period.
Whether you are a marketing leader or simply the person in charge of your performance marketing efforts, this must be your motto: “If it doesn’t pay, we don’t play.”
Sometimes this is easier said than done, especially when your team’s emotions or egos get in the way. But you’ve got to set all of that aside and realize that the numbers don’t lie. Rely on them to build your case around how clearing the dead weight from your marketing investment can and will open up new opportunities for growth across the board.
2. Double down on your highest-performing customer profile
This isn’t the time to cast a wide net and attempt to reach your pie-in-the-sky customers. It is, however, the perfect opportunity to get back to your roots and re-focus on who fits the mold of your core customer profile—in other words, the customers who you’ve been most successful at converting and retaining over time.
We’ve seen this trend play out across multiple industries as businesses have had to partially close down operations, lay off employees, shift growth plans, and do pretty much anything to keep their businesses afloat. Airbnb is a great example of this. In a letter to employees, Airbnb CEO, Brian Chesky talked about the need to build a “more focused business.” The same can be said for Uber CEO, Dara Khosrowshahi’s letter to employees, explaining his decision to “re-focus our efforts on our core” and “no longer need to look far for the next enormous growth opportunity” as the COVID-19 crisis rages on.
Similar messages were echoed by CEO’s from Starbucks to Amazon to Nestlé and beyond. This wasn’t done simply to justify layoffs or validate why significant business cuts had to be made. For many, it was about having honest conversations around how their businesses could realistically overcome the health, economic, social, and cultural challenges inflicted by COVID-19. Many of those messages revolved around a central theme: stay true to your core.
So, how can you do that? First, you probably already know who your core customer is. I’m not talking about marketing personas or customer segmentation here. I’m talking about listening and taking action on what your data tells you about who actually converts.
If you’ve relied solely on qualitative measures to assess things like this in the past, it’s time to flex your quantitative muscles a bit more. Here two key data sources worth their weight in gold:
- Closed Sale Analysis: This will tell you what deals make up most of your closed sales and, of those closed sales, who those customers are based on geographical location, industry vertical, and other demographics that can pinpoint the characteristics of your highest performing customer profile.
- Segmentation: This goes hand-in-hand with your closed sale analysis, shedding light on key demographic indicators that can help you truly know who your ideal customer is, with near-granular precision, through a powerful combination of geographic, demographic, behavioral, and psychographic segmentation criteria.
It’s equally important to note that these customer insights shouldn’t be kept a secret within the marketing organization alone. As a marketing leader, it’s your responsibility to ensure that everyone across the business has access to the right information to stay focused on building plans that will ultimately target, reach, engage, convert, and nurture the customers who have the greatest likelihood of keeping your business growing in both the near- and long-term.
3. Activity metrics won’t cut it
Building a marketing organization around impact requires having a clear understanding of what’s happening at every part of the funnel. Relying solely on activity or engagement metrics isn’t going to cut it anymore. Simply showing cost-per-lead and economics through MQLs (marketing qualified leads) is likely going to come under more scrutiny during this rough patch.
If you haven’t restarted your marketing engine yet, this is a perfect time to gather all of your resources together—including outside consultants—to stitch together a comprehensive, top-to-bottom funnel view of your data to uncover what’s really driving closed transactions. From the ad ID to the closed transaction number, this full funnel view of marketing performance is the only way to get true clarity on what’s working versus what’s not. Not to mention, it can further validate what the data has already told you to be true about your ideal customer profile.
Here’s a great example of how our team provides a full funnel view for our customers. We used LQ Digital’s Segmentation tool to drill down into the age demographics of a client’s true LTV customer. Notice that at first glance, the target age seems to be 25-34 but by drilling into the data, you can see that the highest converting paid customers are 65 years of age and older. Information like this is critical to modifying your customer targeting strategy to create the most economic impact for your business.
In times when every marketing dollar spent will likely be examined under a microscope, volume- or lead-based metrics to showcase the success of your marketing programs simply won’t cut it. You must connect the dots from ‘lead’ to ‘closed sale’ to not only understand what’s driving those conversions but also to replicate that level of success over and over again.
4. Know your unit economics
This is the underlying premise of our entire Digital Economist philosophy. At LQ Digital, we believe that all customers are not created equal. For businesses to succeed and grow over time, they must stay focused on finding and retaining their most profitable customers. Great marketers know that this is critical for driving long-term profitable growth.
At the heart of unit economics is Customer Lifetime Value (LTV): This is the most powerful metric to have in your arsenal at any given time. It’s a metric that tells you how much profit (after customer acquisition costs (CAC) and other hard costs) a converted customer generates for your business over the long-term, from day one until they decide to part ways.
While the LTV sheds light into the health of your customer acquisition and retention efforts, they alone can’t tell you if every dollar invested in marketing will actually grow into something that can pay off for your business’s financial results over the long haul.
To do this, you need to look at the LTV/CAC ratio. As a starting point, you should aim for LTV to be roughly three to four times what you paid to acquire a new customer. This benchmark may need to be higher for certain industries and sectors, like the subscription services sector, where a healthy ratio would be closer to six to eight times your CAC.
Long story short: your CFO will always want to know whether or not you are earning more from the customers you acquire than you are spending to acquire them. As long as you can prove that every marketing dollar spent is driving real value, you will be in a better position to both justify your marketing efforts and also build a case for more budget in the future.
The time is now to prepare for tomorrow
In any recession, even one caused by an “event” like the COVID-19 pandemic, the easiest thing to do is to cut marketing when businesses are faced with a need to trim expenses. Why? Because, on paper, it’s typically the largest “discretionary item” after real estate and headcount.
What many businesses don’t understand—and this is something that marketing leaders must continue to ring the alarm on—is that marketing, when done right and with the right metrics in-hand to prove performance and success, it can be a business’s weapon for economic recovery. Growth will not happen without making the right marketing investments.
Unfortunately, marketers have traditionally failed at telling the right financial story. You have to prove the value of marketing by making some tough, yet strategic decisions: sun-setting non-performing programs, staying focused on your most valuable and profitable customers, and aligning the entire marketing organization around LTV-oriented metrics. This is how you can successfully put marketing at the heart of your business’s ‘restart’ strategy—and also be seen as the superhero who leads the charge to your business’s economic recovery.
If you need help defining the right marketing strategy for your economic recovery, please contact us.
- economic recovery
- marketing strategy