With a saturation of businesses trying to compete for attention, digital advertising has become a must for businesses to be able to reach potential customers. However, there are still many businesses that are hesitant to try online advertising or continue to believe “it’s not for them”. This fear often comes from a lack of understanding. There's an overabundance of information and self-styled experts, making it tough to know where to start and how to plan ahead.
To have the right mindset to create a successful online marketing plan for your business, it's important to get started with a few questions. The following 4 big asks are absolute musts before advertising online - but really, for advertising anywhere. Whether you’re planning to try online marketing for the first time, or you’re just trying to improve your campaigns, don't jump in without knowing these answers.
What is Your Current Cost of Acquisition & Lifetime Value of a Customer?
How many sales would you like to make from the new online promotion? What would your response be?
My guess is that you’ll be tempted to respond, "as many sales as I can." But, unfortunately, every business is limited by budget, because each new customer carries a cost to acquisition.
Having in mind that your reach is limited by your budget, it’s important to take the following values in consideration when planning to advertise online:
- Customer Cost of Acquisition (CAC) is the price you pay to acquire a new customer. This cost includes sales, marketing (flyers, radio promos,etc), salaries and other head count related expenses.
- Lifetime Value of a customer (LTV) is the value (amount of money) you expect to make from that customer over a life time of serving them, or until they depart from the service.
Knowing these values will help you:
- Benchmark your online marketing results.
- Know what’s the maximum amount you could pay to acquire a customer, which must be lower than the customer’s LTV.
- Calculate your online marketing ROI.
We are not going to get into specific calculations, but keep in mind that:
Your CAC has to always be lower than your LTV and it is important to know these values to use as a benchmark for online marketing.
What is Your Quantifiable Goal?
Now that you know the maximum cost of acquisition you can afford to still make money, you need to define:
- How much you can afford to invest in online marketing?
- What are your marketing goals (sales, subscriptions, email signups)?
- What’s the time frame to accomplish your goals?
Without a goal, your intentions are just wishful thinking.
Beyond just thinking : “I want more sales” or “I want more customers”, define a quantifiable goal in a defined time frame.
Answer the following questions to serve as a guideline:
What’s your goal?
- Get sales, increase subscriptions, free trials, fans?
How much or how many?
- $3,000 increase in sales.
What’s the time frame for accomplishing my goal?
- 2 months, a year?
Fill in the blank:
I want to get <insert quantity> amount of <insert goal> in <insert time frame>.
My budget is <insert budget amount> per month. I will test it for <insert time> amount of time.
Start by testing a small budget and increase as you see results with time. Keep in mind that your CAC may be high at the beginning, but it should decrease with time and proper optimization of campaigns.
What is Your UVP & What Incentive Will You Offer to Convert?
Why should someone choose you instead of the competition? Make clear what the benefits you offer a potential customer and what makes you special. This is called your unique value proposition, or UVP.
Tips to explain what makes you special:
- Focus on the customer’s perspective. What value can you provide to them?
- Try to highlight 3 core benefits. Avoid making your list too long or it will be easy to forget.
- Explain benefits in simple terms. Avoid industry jargon and being too technical. It is better to be simple and clear.
Incentives are necessary to give the final push for someone to convert to a customer, especially if they have not tried your service/product before - because you haven’t gained their trust.
You can use hook incentives such as:
- Free trials
- Free gifts
- Limited time or quantity
Look at what your competitors are doing to get incentive ideas.
How will You Capture Visitor Info Even if They’re not Ready to Convert?
This is an extremely important opportunity that many businesses miss.
Someone could be interested in your offer, but may not be ready to make a decision at the moment they see your ad. This lead can still convert to a customer in the future, so it’s important for you to capture their information to nurture the lead to convert him or her to a customer.
Ideas to capture visitor’s information:
- Invite them to join your newsletter by displaying a message in a pop up window.
- Offer free content such as white papers or ebooks.
- Ask them to follow you on social media.
- Use remarketing. It will not let you see their information, but any visitor will be able to see your ads outside your website.
After you collect the lead’s information you can then nurture the leads to help convert them into a customer.
Having the answers to all these questions will make your advertising stronger. Have questions or experience to share? Let us know in the comments!