Ensure growth by investing your marketing budget efficiently
Should you use your entire marketing budget to build reach and generate new customers or should you invest in lifecycle marketing? The aim of well-designed lifecycle marketing is to encourage your customers to return to your products or services again and again.
According to advertising effectiveness research (Binet & Field), approximately 60 percent of your efforts and budget should be applied to long-term brand building, and 40 percent should be applied to activation. Since the initial study, Binet & Field have modified the allocations for brands in different categories at different stages of development, and different price points. Nonetheless, the principal remains the same, activation increases the efficiency with which you convert brand equity into short-term sales. And conversely, brand building makes activation more efficient.
Inherently, marketing budgets are finite. Rather than shooting in the dark, plans should always stem from the very core – the strategy and business objectives of the organization.
Put simply, marketing aims to increase demand for products and services. Advertisers communicate to target audiences to increase awareness, raise interest, and guide recipients through the customer journey in accordance with the familiar AIDA model.
However, the AIDA model is only one part of the story. We also need to maximize retention, encourage customers to return and repurchase, and, optimally, recommend our products or services to others.
In lifecycle marketing, customers are nurtured after their initial purchase according to accurately planned care models, which are based on customer behavior, i.e., content consumed and purchase history. Personalized, relevant, and timely communications via the appropriate channel for each individual not only help increase customer satisfaction and loyalty but also drive growth through up-sale and cross-sale messaging.
Before carrying out any marketing activities, it may be beneficial to return to square one and confirm that your foundation is secure. Is your positioning up to date? How about product and service spearheads? What about pricing, supply, and distribution? Are your customer base and potential audiences appropriately segmented, and are target groups clearly defined?
Your product may need further development, or the product portfolio conceptualisation. The Achilles’ heel of the purchase process can also be perceived customer experience. Are digital touchpoints user-friendly and intuitive? Is data from digital channels and loyalty programs collected and utilized to the fullest extent?
Successful marketing is always based on the business objectives of the organization. The marketing concept and messages accurately implement the brand strategy and the marketing strategy. Finally, campaign plans, channels, and audiences all are strictly in line with the tasks and objectives prioritized in the marketing strategy.
Traditional marketing relies on tried and tested solutions, and improvements are usually made only when planning upcoming activities. Target groups are broad and often defined only by age and gender.
In data-driven growth marketing, target groups are defined very precisely. Automation enables message personalization according to data on the customer and the stage they are at on the customer journey. Channels are used flexibly and the mix is continuously adjusted on the basis of results. Marketing is a continuous and agile process, where actions are based on data and resulting conclusions, rather than separate campaign bursts.
Growth marketing is a continuous cycle: actions are measured and optimized, and new approaches are continuously tested. Lessons are learned and new approaches are adopted to test new means to improve results even further. Continuous growth is reinforced by integrating lessons learned into not only marketing tactics, but also company processes, customer understanding, product development, marketing strategy, future campaign concepts, as well as content strategies.
Conversely, short-term metrics should be interpreted with discretion, as concentrating primarily on these can lead to disregarding long-term brand building. For example, focusing only on immediate ROI as a leading decision metric can be dangerous as it underestimates long-term strategies. However, brand building is not solely about the long term. Any advertising or marketing campaign that’s effective in the long term will also have some good short-term effects. But the opposite is not necessarily true: not all short-term effects lead to long-term growth. Short-term sales therefore need to be paired with brand building. While brand building will take longer, it will ultimately surpass short-term sales. A great strategy is a mixture of both, as per the Binet & Field 60/40 rule.
At Marketing Clinic, we help our customers create brand and marketing strategies on the basis of business objectives, transform these strategies into marketing concepts and messages, and, finally, campaign activations. We evaluate technical needs, implement and integrate the necessary tools, assist in deployment, construct plans, and, if necessary, provide continuous operation as a service. Contact us to hear more!
Les Binet & Peter Fields. 2013. The Long and the Short of It: Balancing Short and Long-Term Marketing Strategies.
Les Binet & Peter Fields. 2018. Effectiveness in Context: A Manual for Brand Building.