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Ineffective marketing and poor online presence are among the top six reasons 75% of new businesses fail to succeed in the long term, according to US Bureau of Labor Statistics research. Meanwhile, in a survey of 1,000 marketers worldwide conducted by Rakuten Marketing, respondents estimated that they waste an average of 26% of their budgets on wrong decisions about channels and strategies. One last stat to consider: Over the course of the year, the grip on businesses got tighter: Gartner Status of Marketing Budgets 2021 The report (which is based in part on a survey of 430 chief marketing officers from large organizations across North America and Europe) revealed that marketing expenditures as a percentage of revenue decreased nearly half In 2021, from 11% to 6.4%.
To improve efficiency even in this cost-cutting environment, companies do not always need to do extensive research, abandon existing channels or restructure marketing departments. At Refocus, we explore three ways to reduce costs and keep marketing effective.
1. Take the time to find out why customers are “renting” your product
Some entrepreneurs and marketers mistakenly believe that Facebook and Google are wonderful fairies that can help launch a product easily and quickly in other countries. In fact, this is not the case. Marketing is a science that carefully studies the lives and needs of customers, and is not just about defining the target audience by place of residence, interests and financial situation.
Before launching an advertising campaign, it is necessary to conduct in-depth interviews. This will help save thousands or even millions of dollars on ineffective activities.
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When my company launched our marketing course in another country, we thought we would have three target audience segments: Senior Marketers, Novice Marketers and Entrepreneurs. In the end, we found that even though we spent money advertising all three, only one needed the product.
After the first ad campaign, we decided that attracting a customer was five times more expensive than expected, and so we set out to do what any marketing team would suggest: A/B testing of landing pages, along with altered designs and experiences with channels. After that effort, we only noticed a 30% drop in lead costs, weren’t satisfied with these results, and decided to move forward, including inviting customers for help. We took twelve people from each department and started asking them questions using the JTBD methodology. The idea of the concept is that different users buy the same product for different purposes – or as they say in JTBD terminology, the product is “rented”.
For example, let’s consider the iPhone: the first buyer hired it to prove the case. The second needs his camera to take high-quality photos, while the third only needs a portable tool to keep in touch with the family. Everyone uses the same product for their own purposes, and the same goes for any business, whether it’s a banking app, a restaurant, or a clothing store. JTBD methods help to know what people need when paying for a particular product or service.
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The methodology of the tasks to be performed exceeded all of our expectations by revealing that two of the three sectors tested were not suitable for us. For example, junior marketers have had no problem finding a job because large companies go after them right after graduation. Major marketers demanded that product-specific instructions be advertised in local channels, usually only applicable to their country. However, our goal was to create an MVP, so we didn’t really want to delve into product customization. As a result, we only had one part left: We focused on entrepreneurs, who needed to learn marketing during the pandemic in order to make their businesses online. We built a new website based on this information and also decided to get feedback from potential audience before releasing traffic. In the end, we collected over 300 user comments regarding colors, fonts, and other textures, and we took them all into account.
2. Find the price transfer credit
Have you ever refused to launch a new product because you thought the price was too high? Or, on the contrary, maybe you felt uncomfortable selling your brainchild at a low price, but the target audience, in your opinion, was not ready to pay more? There is only one way to know for sure either answer: the proposition test. First, do market research to understand what customers are looking for, what competitors are offering, and at what cost. This will increase awareness of the variety of prices and products offered, and your niche.
Second, ask what result you want to achieve. For example, when launching a new product, some entrepreneurs set a low price in order to increase their market share. Others prefer to inflate the cost to attract customers who can pay for an exclusive product.
Here’s how to test course pricing at Refocus: On one site, we sold our course for $400 and spent $150 on attracting each client, then optimized the content and raised the price to $1,000, spending an additional $100 per acquisition . We continued the experiment, and it turned out that the optimal price was $3,000, of which we spent $1,000 on customer acquisition. This allowed us to have the optimal unit economy, along with the budget for expansion and constant research.
Related: 8 Pricing Strategies for Your Digital Product
3. Improve the work of sales managers
Quick order processing is an important part of quality of service and a proven way to increase audience loyalty. If it takes too long to call a potential customer again, he may have a change of mind and/or choose a competitor’s product while waiting.
Our standards for connection speed:
• Excellent: the customer receives a call within five to 15 minutes after applying
• Accepted: Customer receives a callback within 15-30 minutes
• Annoying: call back in 30 to 60 minutes
Bad: Called back after more than an hour
In our experience, the longer the waiting time, the more likely you are to not convert a lead into a customer (more than an hour cuts conversions in half). To reduce callback time, try to implement order distribution automation: 40% of managers with the highest conversion should receive 60% of the lead volume. You can also test the incentive system (managers who call back the fastest receive a reward).
Don’t lose sight of this important part of the sales funnel. If the company is large, no single manager can take advantage of all the conversations, so allocate resources to implement the quality control system in the sales department. Quality control experts listen to sales managers’ conversations throughout the day and then rate them from 1 to 10 according to a number of criteria, including script use, identifying customer needs, product presentation, and objection handling. If a manager makes mistakes and is rejected, the client is passed on to the team leaders and other managers with the highest conversion, who contact him again. In our experience, this approach has helped recover about 10% of abandoned transactions.
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No matter the size of the company, optimizing budgets should be a consistent goal of the marketing department, so follow best practices, including decision-making based on research, testing and experimentation, flexible pricing, and proven quality control methods.