(download a pdf version)
This diagram needs an orientation…
First, the diagram shows different types of coloured box that have different labels:
- Objectives
- Goals
- Indicators
- Propositions
- Knowledge
- Preconditions
Business Marketing Objectives
Your objectives can be represented by the 3 areas of:
- Find new customers
- Keep existing customers
- Grow your 'share of customer wallet' through cross-sell or up-sell to existing customers
The goals of your promotions relate to total revenue per customer, average order value, profit per customer, frequency of sales per customer, and recency of the last sale per customer. (You may have spotted the traditional model of RFM.)
Each objective has a different focus for creating your offer, based on your value proposition and the market intelligence you must have for success.
This makes up the lower half of the diagram:
- Proposition – The proposition (or value proposition) is a statement of what your product will do, who it will do it for, and why it is relevant and valuable to them.
- Precondition – required to deliver each proposition.
- Knowledge – the insights you need to form an effective proposition.
Let’s whizz through them one at a time:
- Lead Generation – Preconditions to a successful lead generation campaign include identifying the right target segments, and having the right marketing channels to contact them by. This will depend on your knowledge of current alternative suppliers (your competition), and knowledge of the needs of your market. From there, you can create a plan for how to attract leads, and where to find them.
- Front-end sale – After generating a new lead, the key precondition to your front-end sale is having a highly relevant product offer. This depends on your knowledge of your prospects motivations.
- Re-sell – A loyalty program will depend on your knowledge of how customers use the product
- Reactivation-sell – When you combine all of the points represented in this framework, your churn rate should be low enough, and opportunities easy enough, that you wont really have to worry about customers you have lost, as many will return as a matter of course whilst your marketing program improves.
- Cross-sell and Up-sell – This depends on your product portfolio which should evolve from the behavioural insight you gain through customer research.
Marketing Metrics and Performance Indicators
The Indicators (or Key Performance Indicators) will give you the reporting fire power to demonstrate your results, and to help guide your next campaign and tweak your entire marketing engine.
- Cost Per Lead – CPL is the average cost of a lead after dividing your marketing cost by how many leads were generated  (Cost Per Opportunity – CPO can be calculated if your sales process involves a few steps, where after you have got a lead, you then qualify that lead, and thus classify the lead as an opportunity – popular with CRM / sales teams)
- Cost Per Acquisition – CPA then is the average cost of a new customer after deducting marketing expenses
- Churn Rate – The amount of customers that do not turn into repeat buyers
- Average Deal Time – ADT is the average time it takes from generating a lead to making the initial sale
- The ‘M’ in RFM can split into 3 different views:
- Average Order Value – AOV is the average revenue per sale.
- Total Purchases – This shows the average running total spent by your customers.
- Profit Per Customer – Customer profit refers to total income minus campaign expenses divided by the amount of new customers generated. (This helps understand different levels of profitability per channel and per product type due to differences in profit margins).
- Average Customer Life Time Value – ALTV Is the average sum total (at present value) of your customers total purchase value minus all marketing costs.
To achieve those goals and excellent performance metrics, we need strong propositions for each of our products that are as relevant as feasible for the audience we can promote to.
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