New customers are the lifeblood of any business, and often the most expensive area of investment. Brands often build complex processes and campaigns to drive new interest, and measure it to the point of conversion.
Yet, despite its importance and the extent of the investment, there are six errors that are repeated time and time again.
1. You Aren’t Really Buying Prospecting!
When it comes to media buying, the problem of knowing what you are buying is an ongoing problem. Programmatic marketing is mostly provided as a black box solution, but because it performs well, it is increasing in popularity. Yet if you can’t see what’s happening, how do you really know what’s going on inside that black box?
From investigating many major ad tech companies, I have found instances of prospecting campaigns that actually include a significant amount of site retargeting baked in. The reasons are obvious – the most likely individual to convert is someone who has been there before. If you know you are buying such a product, that’s not a problem. But if you are intending to buy prospecting, you need to run your own testing and validate whether your program is only targeting net new individuals.
2. You Focus Too Much On Retargeting
And sticking with the problem of retargeting, a marketer must understand the place that retargeting actually has in the marketing mix, and from that understanding, determine how much they should invest in it.
In an ideal world, everyone in your target audience would know your brand, visit your site, convert the first time, and come back regularly to buy again. Given things are never that perfect, retargeting exists as the band aid for the broken.
Retargeting budgets are often inflated, driven up by retargeting-only vendors whose own agenda involves driving up your spend year over year. Have you ever asked your partner what they are going to do to reduce your spend this coming year?
The promise of big data is to know more about your customers, and that extra knowledge can inform you who really needs to hear from you again, and at what price. At Chango (my employer), we have inherited such campaigns from many brands, and have typically discovered 20-40% wastage within 30 days!
3. Your Cost Of Acquiring Is Greater Than Retaining
This should be an obvious point, but it’s not uncommon for a brand to focus on the net new customer, and not enough on the existing relationships.
We know an existing customer is most likely to buy again, and so the first dollar should be used to ensure maximum value is obtained from them.
When you take such a step, that customer base will often become advocates for you anyway. Combined with a smart acquisition program, this will drive the incremental dollars you are looking for.
4. You Worry Too Much About Channels
Every business needs to manage itself with the structure that best fits them. Marketers who enjoy large budgets will often divide those up into digital media, offline, PR, search, social, content etc.. That suits an internal need but often is the source of much wastage, and results in a crappy experience for your consumers.
How many times have you engaged with an online retailer, bought something, and yet continue to see display ads, Facebook ads and perhaps even receive emails — often encouraging you to buy something you’ve already purchased?
This common occurrence is often the cause of channels not communicating with one another, systems not flowing data in real time (and sometimes because of artificially-inflated retargeting budgets).
5. You Don’t Factor In All The Costs
Being in multiple channels simultaneously inherently results in artificially good performance metrics. Many a brand has channels that are “performing” individually, but when you combine all the data, the total number of conversions or the value of the dollars generated add up to more than 100%. That’s because more than one channel is getting credit for the conversion or the sale.
At this point we risk moving into the murky world of attribution modeling, but there are some simple alternatives that I currently like. As an example, if we accept the point above about retargeting generating waste, then we also have to accept that the other pieces are contributing the success of the program.
Take all your other marketing costs that have no home — those not associated with a particular channel — add a best guess metric of the influence of each, and add that spending to the retargeting investment. How does it look now?
6. You Don’t Value Customers
Lastly, customer lifetime value (LTV) is critical. You have built your programs, broken down the barriers between your channels, removed the wastage from your retargeting and are left with a steady stream of new customers. Congratulations!
Understanding what they are worth to you over the lifetime of your relationship will help you identify which channels and targeting tactics are bringing you the most valuable customers. That feedback helps determine your investment priorities for the next period.
If you have followed the steps above, it is likely you will find your marketing mix should differ significantly from what it is today.
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