Stop! Yes, I know you are really busy and your agency is pushing for a new website but really stop wasting your time (money). I am going to tell you something that you don’t want to hear (I am an agency owner too, so I can’t believe I’m saying it). You have your digital marketing all wrong. yep, your throwing ££ out of the window and they are blowing away.
In fact I would go as far to say as most of your digital activity is just blowing smoke up your customers proverbial. why am I saying this? have I gone mad – too much caffeine not enough sleep , eaten a whole packet of Berocca? Well, no – (ok I might have drunk a little bit too much coffee). The truth is, I can save your digital , I can untie the damsel on the train track (your website) before the Shinkansen (your competitors) chops her head off. I am wearing my pants over my trousers this morning, I can stop this .
Every week I am going to give you my tips to save the universe, I mean your digital marketing.
Too short term not thinking of LTV.
As a digital agency, we work with all sorts of clients, one man bands, micro, SME and corporates. We work for B2B and B2C clients in the UK and overseas. Each client we work with has a magnifying glass and this magnifying glass is burning ants like there is no tomorrow when it comes to ROI.
Every penny has to be justified, I completely understand that, but you also have to take a step back and look at the horizon not just the incoming waves. one key element we work on is the customer LTV (life time value).
How much is that customer worth over their “lifetime” with you as a supplier? How long will they stay, how frequent will they purchase, how many referells will they bring in and how will they influence their peers to introduce your brand into their orbit?
Organisations are hell bent on measuring revenue – instantaneous revenue, annual, quarterly, monthly, weekly sometimes even daily. I completely understand. But while you are measuring cash in and cash out you may be missing LTV.
“every action has an equal and opposite reaction” (Newton) So, the paid advertising on Google that drives someone to buy, has a current value for sure but what about the longer term value?
Company X spends £Y on Google Adwords in a month. This results in revenue Z.
Pah! Ive spent money on Adwords and only had a handful of sales – not uncommon to hear in any management meeting. Ok. But what about the LTV of that customer? One sale does not maketh a summer.
How long are you going to keep that customer – how much repeat business will you get? How will that customer introduce you to new and exciting customers.
What we are really talking about is
Company X spends £Y on Google Adwords in a month. This results in revenue Z * purchases per year * number of years = LTV
Stop thinking short term, stop thinking new business. start thinking relationships , nurturing, partnerships .
LTV can be analysed in Google Analytics by creating a new view .
Further reading LTV can be found on Kaushiks excellent site here….
Next week – customer relationships.
John Chacksfield is the owner of Sharpmonkeys a digital marketing agency in Worcester – John also lectures in marketing for the CIM and is an approved Growth Accelerator coach , Design Council mentor and tutor for Professional Academy.