Monday, March 10, 2008

Customer Acquisition--How the Internet Has Changed It

As I wrote on March 4, the Internet has changed the core marketing communications processes fundamentally and forever. Marketers are still trying to come to grips with that fact and to learn how to leverage and optimize the power of the Internet in integrated marketing communications programs.

We all know what the Hierarchy of Effects looks like. We were weaned on it as marketers. Unfortunately, it’s still the mental model that many of us use. I argue that it is simply not the way marketing works today. It probably was never entirely hierarchical. Today it’s more like a maze with many ways of getting to the end goal—a trusted brand. That makes it hard to specify a process that fits all situations, much less make it one that is hierarchical. Earlier I described it as circular and I think that’s an improvement, but that still doesn’t express the complexity of the decisions marketers face.

In the mass media era we spent time and money to reach our target segment and create brand awareness. In the Internet era the more direct approach is to attract the target’s attention with relevant content. The Internet supports the acquisition process in two significant ways:

•Marketers can target an audience for acquisition with little of the wasted reach of mass media. Targeting by display advertising on carefully-selected web vehicles (sites, blogs, social networks) is similar to mass media and we know that it accomplishes brand development as well as generating action. PPC advertising based on contextual keywords targets to an individual’s current behavior. Behavioral advertising, based on actions already taken by anonymous visitors, offers more precise targeting and is consequently growing in favor with marketers.

•Marketers can incite to action, which usually requires driving people to their website. They must carefully consider the actions they want target customers to take on the website, how they will encourage them to take desired action, and the experience visitors will have while they are there and afterward—in the fulfillment and service process. They must also make decisions about how to measure success and how to capture data from newly-acquired targets.

The set of possible actions represents basic objectives that marketers may choose for their campaigns. They include, not in any order of priority:

•Drive first-time visitors to a retail location to make a purchase.
oThat may be as simple as offering store location information, often with maps and other ancillary information. It can include sales promotions like coupons.

•Encourage an immediate purchase on the site. This can rely on compelling content—from product descriptions to customer reviews—and a well-designed and maintained site that leads visitors through a planned, step-by-step process.
•Provide incentives to make an immediate purchase on the site.
oThe incentives can be part of the advertising—a free shipping offer, for example. They can be presented on a landing page as part of a formal conversion process. They can be presented on the site—an offer to “buy two and get a third for half price” shown, at a minimum, on the home/main product page and on the order page.

•Invite visitors to register by offering relevant content:
oAdditional product information—brochures or demos
oSite functionality—build your own product
oA newsletter or alerts with offers of interest
oCoupon downloads
oParticipate in brand community activities

•Encourage visitors to stay on the site longer
oContent like videos
oActivities like games and contests

•Give visitors a reason to return
oCompelling content, excellent experience, ongoing events

These generic objective types have an element that is familiar to B2B marketers but less so to most consumer packaged goods marketers. They imply a multi-step process, except in the minority of cases in which the first-time visitor makes an immediate purchase. If not, the visitor must be enticed to return. Successful retailers have been good at doing that; producers of mass-marketed products (and some services, insurance sold through agents, for example) have not.

The multitude of possible actions and the fact that not all culminate in an immediate sale pose two additional questions. First, how do we measure success? It is not enough to simply attract visitors to the website. We have to get them to make a purchase. Even though that may take several visits, the process is relatively easy to track on the web. Once it leaves the web for a retailer or a dealer, it becomes much more difficult

Second—and necessary for developing the correct metrics—is what is our working definition of acquisition? Is it merely getting an anonymous visitor to the site? Probably not; that’s the click-through dispute. Is it capturing an email address so you can begin to develop a dialog? If you are marketing a genuinely multi-step product—cars or real estate, for example—registration may be an acceptable definition of acquisition. In those two cases, conversion occurs off the site, so that argues for a more limited definition of acquisition. You may hold out for an initial sale as the only acceptable measure of acquisition. That depends on many things including the product itself and your ability to track through to the sale.

Acquisition is a complex task. The Internet hasn’t really made it simpler. It has, however, made it possible to target--even at the acquisition stage. It has made it possible to measure, not only success in ROI terms, but the path of getting there. Finally, it allows marketers to plan campaigns based on data, both consumer behavior data and programs results data.

The change in approach to acquisition is not an option. Marketers cannot afford to ignore the potential of interactive marketing in their total mix, both for reasons of cost efficiency and because consumers are demanding the relationships.

The changes in acquisition lead to a greater role for conversion. More about that in a forthcoming post.
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1 comment:

Johnny Mulder said...

In our business we want clicks we can track. We do a lot of PPC and we watch for click fraud which comes in a few different forms, not only clicking to cost you in the PPC but searching for your term multiple times and not clicking on your term which will lower your quality score.

There are companies in India and probably elsewhere that have advertised this service in the past. You lower your competitors quality score and it raises his cost per click and lowers his organic page quality.

Organic listing is KING!
Listen to Dr. Roberts. She went to the store but didn't do her research online so it was going to take her longer to shop. If I'm buying a present for my lovely wife, I search Google first. I may buy it at Costco or I may buy it at Nordstroms but I look on the web first.

We have clients who send in YouTube links of them using our products. We try different links and we get really good results at times. Study the time on page and it will show you if people are viewing. This will also raise your page score for organic listings.
Try different positions on the page. Do some free A/B testing on Google.

It's fun for people and a great testimonial for you. A client spent the time to video your product and put it on line.
This SELLS!