Digital Marketing for CXOs

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Digital Marketing for CXOs Tutorial

This is the Digital Marketing Evolution tutorial of the ‘Digital Marketing for CXOs’ course offered by Simplilearn. We will learn about various digital media platforms, various channels, customer engagement, targeting and how to make a long-term relationship with them.

Over the years, we've seen the marketing landscape evolve into a very complex technical environment. There are different technologies, different tools, but when we think about it, we can go back to the core concepts of marketing. Those concepts still prevail, even in the digital world. In this tutorial, we're going to look at different points that we can really look into, in order to get ready to evaluate things like,

  • Customer Lifetime Value
  • Advanced Segments
  • Better Understanding of Customers

Objectives

In this Digital Marketing for CXOs tutorial, we will cover the following points:

  • Understanding the customer journey as a starting point for acquisition, conversion, onboarding and retention, and eventually, expansion of your customer base.
  • How to target customers using advanced segments, either from personas or from product thinking.
  • Understanding Customer Lifetime Value

The MarTech Landscape

When we look at the marketing landscape, it has hundreds and thousands of different technologies. The problem is not the technical since there are tools out there to let us execute our most advanced marketing strategies. So, if we set that aside, we need to think about the evolution of marketing; how did we get here?

Evolution of Marketing

It started with websites, and earlier on, we were measuring what was going on on the website. We were looking at log files, and then we entered an era known as E-WHATEVER era, where everything was either E-Business, E-Commerce or E-Marketing. Everything added ‘E’ in front of it, and that lasted for a while.

Eventually, people realized that, after all, it's not E-Marketing or E-Business, and is rather just Marketing and Business.

Then we evolved into Web 2.0, and there was also the bubble growing at that time, where there were numerous technologies and numerous ideas in the market. Some of them were really good, and some of them were not, but eventually, there was some shakedown in the street, and the bubble burst took place, and we entered the era of the Enlightenment.

Around 2002-2005, people were getting much more reasonable about their expectations, but also how they were executing on their marketing strategies using those technologies. From 2005 until these days, we live in an era where software as a service was really strong.

So we wanted to move from and gradually go back to the initial point, which was about understanding hits and page views and visits on websites.

Now it's much more complex. It is all about understanding customers now, but those customers are using different devices. They use their website on the desktop, but for many websites, what we realize is that sometimes 80% of the traffic comes only from mobile devices, phones, and tablets.

We need to understand how users interact with a brand using different technologies, different device, different tools, through social media, through different advertising techniques and even offline. This customer journey is getting very technical, where we went from something that was very technical like hits and log files to something that is much more complex measure but is truly important, which is customers.

We are heading into a complex world, where we will be able to measure, what is going through different touch points, be it online or offline which will impact our marketing strategies.

The Customer Journey

Whenever we interact with our client for the first time, it's always important to ask them about their business and also ask about their customer journey. For example, What are the logical steps (for your organization) that your customers are going through?

We can use a general approach like

  1. How do we attract customers?
  2. How do we engage them on our website or through mobile devices and different touchpoints? How do we eventually convert our customers and make them purchase our product?
  3. How do we retain them?

For example, after we sold our product, what kind of post-sales services we can offer, customer support, or through a call center, it is still the part of their journey and that is how the interaction with brand takes place. Eventually, some of these customers will become the advocate for the brand and will talk about us by writing reviews, talking about us on their own blog, or through social media. This will, in turn, come back to the attract phase and the loop will go on.

So if we think about this customer journey, we can say that there are customer acquisition activities and our marketing strategy needs to be tailored and adapted to customer acquisition aspects.

We also have the converting, onboarding and retention aspect. We will have different marketing strategies for this.

And, finally, there's the customer expansion phase which is how we retain our customers and also grow the share of the value of those customers because we have a long lasting relationship that is a win-win scenario for both, the customer and the company.

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Targeting Customers

When we define a customer journey, sometimes, we tend to use all the platforms like Facebook, articles or website to publish the journey. This is not a correct marketing technique.

Data Stack

When we look at what is required to optimize and improve on marketing strategies, it starts with the way we collect the information from the various advertising platforms that we use.

Then we look into how we can collect data from the environment that we control like the website and mobile application. There are tools available that are specialized to do that. Web Analytics tool is able to collect data of where the traffic is coming from, what are they doing on our website and whether it works or not.

We also want to understand the customer journey across all of those touchpoints, so we need a big data or own data warehouse environment where we will be able to make sense of the data. We will be able to merge those different touchpoints in different data source into something that will eventually make sense. It is a technical task and can get very complex, but is a requirement in order to get to the last step, which is the analysis, where we can get out of this data using sophisticated tools.

Why is it so important?

If we think about customer acquisition, it can cost five-time more to find new customers than keeping the existing ones and grow the share of values of those existing customers. So the point is not about acquiring customers but is about acquiring the best customers in the long run at the optimal cost.

The only way to do that is to look at the whole customer journey, and see what is impacting their experience.

Paid Media

Paid Media is any third party that we pay in order to put our ads through their network. Examples are Google paid search, purchasing banners, purchasing tv and radio commercials.

Owned Media

Owned Media is the assets that we own ourselves like a website, mobile application, and own advertising since we have own office or store.

Earned Media

Earned media is when people talk about us. We don't have much control over it, but we still earned this visibility because people are talking either positively or negatively about us. We always want to have an advocate that will share the love for the brand.

So where do we start? What is the balance between advertising in order to improve the brand?

Brand Awareness Campaigns versus Direct Response Campaigns

Brand Awareness will help people choose our brand while Direct Response campaigns will aim to help people actually ‘buy our product.’ So obviously the tactics and the tools that we use are going to be different.

Digital Marketing Channels

Let us look at the different Digital Marketing Channels.

https://www.simplilearn.com/ice9/free_resources_article_thumb/various-marketing-tools.JPG

We can see that some of them are much better for acquiring new customers while some others are much better to retain those existing customers.

  • Paid Search is much more efficient as an Acquisition channel rather than as a Retention channel.
  • Display Ads are super efficient when people don't already know about our brand, but maybe they are not as good or as efficient when it comes to retaining our customers.

We will look at other channels that are more efficient at Retention compared to Acquisition. When we look at how marketers are spending their efforts and their dollars into different strategies, what we see is that most marketers are always trying to acquire new customers. In a survey, we found that 44% of marketers are trying to focus on Acquisition strategies while only 18% are focused on Retention strategies.

We also know that it's five times more expensive to acquire new customers, so we need to balance those efforts in order to retain more of customers.

Audience Segmentation

We can segment our audience; we will be able to tell them our message through the right channel, in the right medium, in the right format and with the right call to action.

Personas

The classic approach would be to use personas. When we build websites, we often use personas, which are fictitious characters that represent the several types of the audience that we're targeting. It can be like, whether it is a male or a female, what is their age group, what are their interest.

Next, we will be gathering the team to

  • brainstorm about characteristics
  • review those assumptions
  • gather some data or some information about psychographic and demographic aspects which maybe some statistics, customer interviews, focus groups.

Then we organize those into common traits in common groups, and now we have our personas which is really helpful. Now we can apply those personas in our marketing strategies and our marketing tactics and see if it actually works. This is a classic approach to it.

Product Thinking

A new way to think is called product thinking, and in product thinking, the ‘user’ comes first. When we focus to be customer-centric, we need to use products thinking, which would be a demonstration of being more customer-centric.

Problem

What is the problem that we can solve for a specific target audience?

How are we going to solve that problem for this target audience?

What is the vision of how we're going to match the problem or a desire from our customers with our own strategy?

We need to find the solution fit between ‘this problem this audience’ versus how as an organization or as a business we will be able to solve that efficiently for them.

Output

The next step is the output. The output will be ‘what is the goal or what will be the demonstration of success’ and how do we know that we have succeeded. The metrics that are going to help us identify that we are moving in the right direction to solve this problem for this specific audience.

When we combine all of those aspects what we realize is we have a nice statement where we just need to fill in the blanks.

“In order to achieve our vision, our product or service will solve a specific problem for a specific audience, by providing them with a solution. We will know that our products or services are having success when we see results.”

So we have a statement that becomes a blanket approach that can be very generic, but they're very useful since it replaces the smart objective that we often hear about. Also, using product thinking will help us make those objectives much clearer and easier to describe an easier or communicate with our stakeholders.Now that we have our target audience, we know how we're going to solve, and we know how to entice them through marketing to come to us. Since we have converted them, we need to onboard them, and the onboarding activities are the first touchpoint that we have with our customers, once they have gone through the actual purchase process.

Brand Experience

Sometimes customers have to complete more information through a form, or they have to set up something, or they have to register a warranty. In all of those activities or touch points including training and things in early customer support, all of these touchpoints are critical because they set the tone for the whole customer experience.

If those touchpoints are not very optimized and successful, then we risk losing more customers. Once we've boarded our customers, we want to retain them.

What are the tactics that we can use to retain them? Some tactics are much more efficient than others.

Email is probably one of the most effective tactics because there is a relationship with our customers and they are willing to give us their email address so that we can entertain or nurture this relationship through Email campaigns.

Why is customer retention important?

Besides the difference in Acquisition cost, the retention aspect is also important because if we are able to increase our retention just by 5 %, our profits will go up by 25% - 95%. The point is basically, that if there is a small increase in customer retention, it reaps huge benefits, regardless of the industry, regardless of your product or service.

Customer Expansion

Customer expansion is not only about retaining our customers, but it is also about increasing the share of wallet of those existing customers. In a recent study, we found that our existing customers are 50% more likely to try a new product, a new version, or a new improvement and pay for it, and they are even willing to spend more with us compared to new customers.

This is why we often find on websites, a regular package, but there is also an enhanced package which is more expensive. So at first, our customers will opt for the basic or the cheaper package; but through their onboarding experience or through their retention quality of the relationship, they will be 50% more willing to say yes to the other package or the other service which is more expensive.

Measuring the Digital Enterprise

In terms of analysis, one of the classic approaches is doing an RFM Analysis.

RFM Analysis

RFM stands for

  • Recency
  • Frequency
  • Monetary Value

The concept is pretty simple. Customers who did purchase recently and also have done many purchases over time and spent a large amount of money with us are much more likely to spend again and retain in the future.

If we had a pattern where somebody used to purchase on a regular basis, but they haven't purchased in a long while, they are closed to churning, or they are close to abandoning us.

What if it was a new customer, and they did only one purchase recently where they spent an average amount of money with us? Now we can tailor our marketing strategies and tactics in order to segment those groups based on their Recency, Frequency, and Monetary Value.

https://www.simplilearn.com/ice9/free_resources_article_thumb/rfm-analysis-customers.JPG

So using this simple model, we are going to make a huge impact on our ability to improve our marking. If we are not able to do RFM segmentation or RFM analysis, we have to consider this as the starting point.

https://www.simplilearn.com/ice9/free_resources_article_thumb/video-preview-banner-digital-marketing-cxos.jpg

Customer Lifetime Value

80% of the companies want to evaluate their Customer Lifetime Value, but only 40% of the companies are able to do it. This also happens in the digital world and is a fairly complex thing to do because it involves a long-term relationship, it involves additional data, it involves the challenge of the different touch points, and it starts with proper attribution.

Attribution

When we only talk about the digital marketing aspect of Attribution, it starts with a good marketing taxonomy, a good campaign taxonomy, where we will clearly identify each and every marketing activity, so that when it is spent or disseminated on the web into different advertising platforms, we will be able to confirm that the activity had an influence over conversion, over retention, over different touchpoints that we had with this specific customer.

Attribution Challenges

There is a huge challenge in attribution.

  • Cross-device aspect: going from mobile to tablet to desktop
  • Online and Offline aspect: going from shopping online and converting offline or doing a purchase offline and coming for customer service online

All of these touchpoints becomes very difficult to identify customers which is part of Attribution. So, if we want to move to customer lifetime value, we need to make sure that we have a good campaign taxonomy is a very important starting point. When we have a good campaign taxonomy, we may not do customer lifetime value just yet, but we will be able to do better attribution.

Also, since some tactics are more efficient at acquisition and some others are better at conversions, we can look at different attribution models.

Attribution Models

Let us look at the ‘Last Interaction.’

Some marketing tactics are pretty good at the Last Interaction, but this is just the last touchpoint. What happened before that?

We need to compare and contrast the different attribution model to see which ones of our marketing tactics are going to be more efficient at brand awareness and attracting new customers versus actual enticement actually to make a conversion and purchase.

Eventually, we can go to Data-Driven attribution models, where a computer system will actually use our historical data and build a model that is specifically tailored to you. This is more advanced. The best part is we know there are technologies to do that. It's not a problem of technology and tools but is a matter of being able to cope with the complexity and the challenge of bringing a data-driven culture to the organization.

Once we have a good handle on doing RFM analysis and doing attribution for having a great campaign taxonomy in place, we will be able to look into Customer Lifetime Value.

Why is Customer Lifetime Value so important?

Besides the fact that we've already mentioned the acquisition cost versus retention, we could also use the Pareto Law, which says, 80% of your revenue can be attributed to 20% of the customers. So we want to know which 20% of our customers are bringing those amazing revenue.

Generally speaking, we are going to look at Customer Lifetime Value over a span of 12-24 months depending on the business and the historical data that we have, and we will build the Customer Lifetime Value based on the historical data.

Example

Let's start with a simple approach by looking at cost per acquisition or CPA. Suppose we have different tactics in place and we spend some money on paid search, social ads and video ads and each one has a different price, and each one will bring a different number of customers.

So if we take the amount of money we spent versus the customers that were acquired, then we can calculate our customer per acquisition. This is a good start, but it gives us a little aspect or a little picture of what is going on. The next question is ‘Which one to opt for? Should we go for the cheapest CPA? What if those cheaper ones don't stay with us in the long run?

Now we can think of those that typically come from paid search which had a very low CPA of 1$, but over their lifespan or over the time they where our customers, they only spend 10$ each. While the video ads were more expensive and brought in a few customers, but these customers have spent 10X more with us. So their Customer Lifetime Value is much more interesting.

We have now started to have a different perspective now. Earlier we were looking at ‘how much traffic we bring to the website or ‘how much visits are there in each session,’ but now we've moved beyond, and looking at conversions and CPA. But if we look at the Lifetime Value, then we have a different picture.

We were able to measure the profit we can do from those different channels and then we're going to be able to adjust our marketing tactics.

Average Revenue per User

Suppose we're in July and we have just two customers. Alice has to spend 150$ in January and so on throughout the months. Bob did the same in June where he spends two purchases of 75$ and 100$. We can do simple math and arrive at Average Revenue per User(ARPU).

https://www.simplilearn.com/ice9/free_resources_article_thumb/arpu-example-table.JPG

It doesn't account for changes in their customer behavior. For example, Alice made the first purchase in Jan and then waited until May and June to make another purchase. Also, can we predict what is going to happen with Bob since Bob made two purchases in June and then wait several months before doing another purchase, we cannot predict.

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Cohort Analysis

When we talk about Cohort, we usually think about months or the time window when they became a customer. On the first month, they do this, in the second month they do that and so on. The Cohort is based on any segmentation we like. Those on the west coast versus those on the east coast should have different behavior. Think about personas, think about product thinking, and we could create a cohort based on that segmentation.

Look at the actual table below.

https://www.simplilearn.com/ice9/free_resources_article_thumb/cohort-analysis-table.JPG

We have displayed the purchase data for Alice and Bob.

The concept is very simple, but it doesn't account for the fact that all months are not equal. So if there is seasonality or during black Friday, it might be a big month, or maybe February is much lower, it doesn’t account. It doesn't account for big changes in the market, or in the behavior of your customers.

We have systems that are able to calculate that for you. But it is important to understand the core concepts of RFM, Customer Lifetime Value, the customer acquisition of attribution and your marketing and campaign taxonomy.

Marketing Organization Structure

We need to have the right resources, the right mindset and we need to have people who are really strong in using some technologies or applying some concepts. They have the depth of knowledge in one area, but sometimes they like the breadth of general understanding of what is going on.

So, should we have someone who has a broad understanding of the marketing concepts or do we need to onboard someone or train someone who will become an expert in some specific areas? We need a team where there is a complementarity because the landscape is way too complex.

So we need to have different team members, and in the team dynamic model, if we want to have empowered analytics and empowered marketing, we look at people who have a strong business aspect of things. It starts with the business and people who are able to enable the solution and finally people who have some Analysis skills.

Let's look at how it works.

It starts with the business.

It starts with a strategy and some goals that are going to be communicated as business requirements and objectives.

To people who are good at understanding what are the limits and constraints of the techniques that are involved in your marketing dream. They understand how to leverage Facebook fully, they understand what is the information architecture of your website, they understand what are the functional components of your website or mobile application and how those interact with your back office. All of that is comprised of the enabling capability.

What they do is they supply the means, the tools, and the data to people who have a strong ability to do problem-solving, to sanitize a lot of information into something meaningful that can be communicated effectively. They have an ability to apply statistics and analytics concepts, so they can communicate back to the business, actionable insights and recommendations.

https://www.simplilearn.com/ice9/free_resources_article_thumb/team-dynamics-triangle.JPG

So now you have a nice loop, which goes from business to actual execution, to analysis and will improve the overall performance of your marketing strategies and the ability to measure success. Again, it is so complex that nobody can master all of those three areas on their own, so we will have people who have a strong point in one of those aspects and maybe another point which they can they can manage and find the last one is something difficult, since they are not skilled to do that or they're not interested in doing it.

So each of the team member along with ourselves should know which area we are most comfortable with. If we think about marketers, they are strong on business and analysis side, but the technical aspect is something that they can manage sometimes, but probably not the thing that excites them.

If we think about data scientists, they are really strong on the Enabling capabilities, and the analytics side, but they won’t go for the business side, which is fine because we need people who have different skill sets.

If we think about digital analysts, they will be strong on the enabling or the analysis side, and sometimes they're going to be strong on the business side as well since they come from various backgrounds and vice versa.

Key Takeaways

Let us look into what we have learned so far in this tutorial.

  • Leverage fundamental marketing concepts in adopting a data-driven culture.
  • Use concepts such as RFM analysis, attribution, and Customer Lifetime Value for more powerful segmentation and marketing.

Conclusion

This concludes Digital marketing for CXOs tutorial.

  • Disclaimer
  • PMP, PMI, PMBOK, CAPM, PgMP, PfMP, ACP, PBA, RMP, SP, and OPM3 are registered marks of the Project Management Institute, Inc.

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