Tuesday, January 6, 2009

Taking Your Marketing to the Web

In this section:
*Absorbing the web into your overall business plans
*Rethink your marketing
*Basic web numbers everyone should know (on a constant basis)

Absorbing the web into your overall business plans

Just as in off-site businesses, on-line business requires an awareness of business fundamentals, a combination of marketing techniques and an indelible focus on your customer. Good, stable businesses that continue to grow over time, start with slowly building a customer list, experimenting with a variety of techniques until word -of -mouth marketing kicks in. A couple of things to keep in mind at this point.

You must have the business fundamentals right before you can have a truly successful Web site. Don’t confuse revenues with profit. Manage your cost, merchandising, and customer service to keep your bottom line a true profit!

Successful web marketing requires a combination of methods. Divide your web marketing budget wisely! As mentioned in previous articles, the key is to combine traditional media with online marketing efforts. Having said that, decide what portion you will devote to each, then break it down even further to what type of off-line advertising: (newspaper, radio, newsletter ect.)and Online advertising: (pay-per click, banner adds ect.) you want to do. Limit your list to 10 tools in each category for now, and pick the top 3 in each on/off line categories. These will be the first you will concentrate on if you are just starting out. Of the top 6 tools you picked assign a percentage value of your budget. Numbers do not have to be in equal proportions. As a general rule of thumb when you are launching a site assign a 70-30 ratio for offline-online respectively as your goal is to get the word out that your web site exists. Once you develop more unique visitors and build a community, it will make sense to change your budget to 70% online 30% offline advertising. The best marketing plans are actively revised as your marketing needs change. It should also be a live document that allows you to clearly see and forecast your profits at the close of each quarter. Yes! Ladies and gentlemen I did say quarterly NOT annual!

Take a moment to make your own list of marketing tools that would work for your business.
The customer is the measure of all things Web, from site design to marketing. It has been said many times, I am not reinventing the wheel here. But do you really think about your customer in everything you do? It is easy to get carried away with what technology can do for a website. It would be wiser however to consider some simple statistics on human behaviour. The number 7 is your best friend! General retention is: 7 words, that we can actually recall when reading. It takes 7 seconds to look at a billboard to remember details fully. 7 visits or more is the number of times a customer returns to your web site before they make a final decision to purchase or act on your offer. Coincidence? I don’t think so. Take the free lessons learned from some very expensive studies the big marketers already paid for. Customer retention will be discussed further in the next articles.

Rethink your marketing

If you are already in business, you know you have to spend money to make money. You may need to redistribute your marketing budget to free up funds for marketing online. Here’s a method to elevate your marketing analysis from guesswork to grand plan. First make a 4 column list organized as follows:
C.R. = Conversion Rate
Marketing Tool >>>Offline-Toronto Star
Target Market it Reaches>>> Busines Professionals 30-50 in TO
How many new cust. it brings >>>100 leads/campaign @5% C.R. is : 5 cust. x 56weeks = 280ppl
Cost Per Year>>> $2,500.- or $8.90/ customer
Marketing Tool>>> Online- Banner Ads
Target Market it reaches>>> Business Professionals 30-40 in TO, who make 50+ per year, read fishing magazines* and follow UFC online. *
How many new cust. it brings>>> 500 leads/adv @5% C.R. is : 25 cust x 56weeks=1400 ppl
Cost Per Year >>>$2,500.- or $1.78/ customer

* Online marketing tools allow for a much more targeted audience with a significantly lower acquisition cost per customer.

If you’ve been in business for a while, you might have forgotten some of your recurring marketing investments. Here are a few examples to spark your memory: A Yellow Pages listing, Canada411 is a must for any business, signs, business cards and letterhead, logo design, a listing in local business club directory, soccer team, newspapers or other print ads, direct mail, local fliers, word of mouth, radio spots, billboards, and so on. If you don’t have extra money to invest in developing and promoting a Web presence, decide which existing methods you can cut in favour of more cost effective online marketing. If you can duplicate your reach at lower cost online, you can put the difference into your Web site.

Reaching your current audience online

Using the brainstorming exercise in part 3, you now have your target audience defined in great detail. You know who they are, what they do and when. Its time to brainstorm once again, this time keeping this one question in mind. “ Where would I be, if I was my target market?” Knowing what you know about your audiences’ habits and likes make a list of specific places or websites a person visits. I am a big fan of the little sticky pads. One idea per page in any order it comes to you. When you run out of ideas arrange them in logical groupings that makes most sense to you. BAM ! You have your specifics on where to advertise to get the most out of your dollar. You may be a bit overwhelmed by ideas at this point. One good rule of thumb is – USE A RIFLE NOT A SHOTGUN- when you want to acquire new customers. You may have heard of guerrilla marketing, which is just a fancy term for take it one step at a time. Once your list of ideas is complete, you start one by one with “rifle” precision and work your way to the bottom of the list.

Its worth changing your mind !

Traditionally, brick and mortar stores offer a few products to many people. In contrast to this web marketing/sales provide many products to few people, at a lower per head cost and far greater return on investment. To prove this , consider the Long-tail theory of opportunities: a marketing model used by successful Websites.

The long tail, shown in the graph describes a situation in which a lot of low-frequency events (think sales for various products) add up to more than a few, high-frequency events. The low-frequency events tail off, but added together they make up more than half the total. This theory suggests that the reach of the Web is so vast that you can have a profitable business selling many items to a few people rather than spending a humongous marketing budget to sell a few items to many people. It works for Amazon.com and e-Bay. Why not for you? The trick is that those few people need to find your product in the vastness of cyberspace, or you have to find them! Hence the importance of a well defined target audience.

Basic web numbers everyone should know

There are three overarching points you should keep in mind when marketing your product/service. If you measure everything against these 3 criterias you will be fine!

Do you plans fit with the needs and interests of your target audience?
Do your plans make financial sense?
Are your plans within your capabilities to execute?

Rid yourself of the notion that marketing on the Web is free. You can spend a lot of money, a lot of time, or some combination of the two, but you can not get away without an investment of some sort. Before you go online, think hard about the numbers. As a good business person, consider these 3 benchmarks, which are described bellow.

The cost of customer acquisition

The more expensive your product or service, the more you must spend to acquire a new customer. The average cost of acquiring a new customer approximately equals the profit derived from an average customer’s purchase in the first year. In other words, you might not make a profit on your customers unless they spend more than average OR you retain them for more than one year.

To calculate your bottom line: cost of lead acquisition = marketing cost / # of leads.

Break even point

Break even is the number of sales at which revenues equal total cost. Anything over that is profit.

To calculate your bottom line: revenues – cost of goods = gross margin
Now, total your fixed costs (same charges you have every month: hosting, phone) for your Web site. Finally divide your fixed costs by your gross margin. That tells you how many sales you must make to pay for your basic Web expenses.

Return on investment

Return on investment (ROI) looks at the rate at which you recover your investment in site development or marketing. To calculate your ROI, simply divide profits (not revenue) by the amount of money invested to get a percentage rate of return:
Profit / investment = rate of return

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