It’s no secret that market conditions have changed significantly over the last year. High inflation, the impact of the war in Ukraine, and several other factors have led to the lowest growth rates seen for many years. Luckily, marketing strategies don’t have to haphazardly transform along with the unsteady market. Instead of immediate cost-cutting, there are strategic shifts companies can undertake to protect their profits.
The key is to avoid rushing into wholesale strategic changes. In fact, digital businesses should slow down and take the time to evaluate what is at the core of their company’s success. Instead of making quick changes to reduce costs and waste, focus on what makes the company profitable in times of steadiness. Luckily, this can be done effectively by strategically re-investing in four key business principles, both internally and externally.
Step 1: Invest In Existing Customers
Instead of losing customers to an economic downturn, offer them additional value that increases loyalty. Any digital business can achieve this by listening to its customers and focusing on the things that set them apart from the competition – both of which are vital during periods of volatility.
The first step should be to re-evaluate existing customer segmentation. A leading global luxury watchmaker took this approach in order to deepen its understanding of key consumers. By capturing insights about existing customer clusters from website visits and surveys, the brand applied more targeted advertising and personalised experiences based on the foundation of non-personally identifiable information.
Remember, the best customers are the ones that provide the highest value to any business – and that keep coming back. That’s why it’s so important to invest in delivering the best possible experience to these top customers. Any company that can optimise customer interactions to offer a superior experience will be rewarded with repeat business – providing value in the short-term as well as future-proofing the company.
Linked to this is reducing customer loss, as no business can afford to lose existing customers during an economic downturn. Businesses should therefore consider whether their strategy is primarily focused on the first conversion, or truly optimised to bring back customers. If it’s the former, the challenge of turning a falling volume of interactions into business will become even harder.
Step 2: Optimize Your Existing Marketing Tactics
During challenging times, ensure the marketing budget, and its subsequent activities, supports the wider company priorities. Establish a clear picture of the impact marketing spending has on the bottom line. Where is spend having the greatest impact? What are the highest-value acquisition channels? Optimize the acquisition funnel and approach paid digital marketing in a more granular way. This is what will help digital businesses identify pockets of growth and areas that could be improved, which is the first step towards advancing operations.
For example, if demand and lead generation are key activities, focus on identifying the tactics that are proving most effective. Businesses should be prepared to test different approaches and optimize those that work best. The more visibility and granularity businesses have into the quality of their leads and the journey to conversion, the more scope they will have to apply learnings and keep improving ROI.
Additionally, optimizing the marketing mix can be an effective way of increasing quality online sessions while cutting costs. This can be achieved by leveraging data science capabilities, such as building self-generating reports containing marketing spend recommendations and expected uplift. These reports can then be sent out to respective biddable media departments as part of the marketing strategy.
Step 3: Use Data To Inform Next Steps
The foundation for understanding the current market is a data-driven mindset, as this will help businesses run at maximum efficiency. When an external shock occurs, digital leaders need to double down on data and analytics to understand what is happening and why.
From an analytics perspective, mastering this discipline can provide new customer and market insights and reveal previously hidden value. This is only possible with a data-driven mindset, where behavioural data of customers and website visitors is used to test hypotheses and support innovation.
For example, Valtech recently worked on a data project with a global B2B manufacturer and solutions provider for the building and infrastructure industry. To support the launch of its ecommerce business in more than 20 markets, we connected all relevant data sources (traffic sources, web behaviours, financial systems, etc.) to deliver the right reporting and insights. This enabled the company’s global teams and local markets to optimize their operations based on facts and relevant data-driven insights.
Keep in mind a data-based mindset should be applied across the whole customer journey, as well. With data at the core of their operations, businesses will uncover opportunities to gain extra revenue and maximize conversions by establishing test-measure-learn processes. This applies both to marginal gains and larger-scale growth opportunities, both of which contribute to outperforming the competition.
Step 4: Focus On Workplace Efficiency And Internal Workflows
Lastly, it is key to address the company’s existing operational structure and its resulting strengths and weaknesses. By identifying workflow inefficiencies and taking the time to improve or adapt processes – as well as re-evaluating internal structures and hierarchies – businesses will be in the best position to protect their profits.
Danish retail brand Coop provides a perfect example of a company that adapted its internal modus operandi when faced with a drop in online market demand. It refocused its resources and personnel into cross-functional groups, with the goal of driving commercial excellence in three key areas: pricing, marketing, and assortment/stock. This organizational change helped Coop optimize sales performance and uncover key learnings that have now been applied as part of a stronger operational setup.
Ultimately, understanding how to react in times of uncertainty isn’t easy. However, there are plenty of steps digital businesses can take to thrive in even the most difficult times. By focusing on these four areas, they’ll be able to take advantage of new opportunities and unlock value that wouldn’t previously have seemed possible.