by brantley crowder — January 8, 2019
Digital marketing strategy is micro-optimization which makes it the nerdy sister of traditional marketing strategy. Where a traditional marketing strategy is a floodlight, digital marketing strategy is 10,000 matches burning at the same time. To understand the digital marketing strategy, you must understand the data that instigated the lighting of each of the 10,000 matches. This makes presenting a comprehensive digital strategy difficult, especially to members of the organization who are not involved in digital operations.
Years ago I read a fantastic post written by Avinash Kaushik titled Aggregation of Marginal Gains: Recession Busting Analytics. Although the aggregation of marginal gains is not as sexy as the next big photoshoot, it is the reality of digital marketing. In order to initiate the aggregation of marginal gains, you must turn to the data. The average annual e-commerce revenue growth rate in 2018 landed between 18–25% depending on the particular market sector. We have seen similar annual e-commerce growth rates for several years. Business owners are not firing off single silver bullets into their digital strategy each year to produce these growth rates. Digital revenue growth rates are a product of the aggregation of marginal gains or micro-optimization.
Micro-optimization is a different way of looking at business. It is small ball, to use a baseball analogy. Small ball emphasizes bunts and base stealing rather than home runs. Similarly, micro-optimization focuses on small gains across many business metrics to create robust growth. It is not as flashy as a grand slam but it is much more predictable and reliable.
Today, digital marketing professionals have access to an incredible amount of business-related data. However, data is useless unless it is acted upon. But, with the current digital marketing data overload, it can be challenging to distinguish the key metrics from the fluff. Information is nice but too much information can be an impediment in relation to business strategy. I suggest tossing all of your data into two buckets; data directly relating to the bottom line and all other data. This one action will completely change your approach as a digital marketing professional. If you cannot directly tie a marketing directive to growing revenue than just don’t do it. I know this sounds like a hard line, especially for marketers because we are creative people and we love elegant campaigns. As digital marketers, we must get comfortable with the elegance of micro-optimization although it is much harder to see. Consider the macro-data tables below.
Annual Website Traffic Conversion Rate Average Order Value Total Annual Revenue 600,000 visitors 4% $75 $1,800,000 600,000 visitors 4.5% $75 $2,025,000 600,000 visitors 5% $75 $2,250,000
As you can see, a 1% change in conversion rate, all other variables remaining the same, creates a revenue increase of $450K.
Annual Website Traffic Conversion Rate Average Order Value Total Annual Revenue 600,000 visitors 4% $75 $1,800,000 700,000 visitors 4% $75 $2,100,000 800,000 visitors 4% $75 $2,400,000
We see a similar result in total annual revenue when we increase website traffic, all other variables remaining the same.
Annual Website Traffic Conversion Rate Average Order Value Total Annual Revenue 600,000 visitors 4% $75 $1,800,000 600,000 visitors 4% $85 $2,040,000 600,000 visitors 4% $100 $2,400,000
Again we see a similar increase in total annual revenue as we increase AOV, all other variables remaining the same. Think of total traffic, conversion rate, and AOV as your macro data. Seek the data-points that drive this macro data and you will find the starting for your micro-optimization strategy. Depending on the nature of your business the micro-data points feeding traffic, conversion, and AOV data will vary. As you carefully consider each of the three, the microdata will begin to reveal itself. For example, email marketing click-through rate (CTR) will directly impact traffic and indirectly impact conversion rate an AOV. Similarly, your shipping options will directly impact your conversion rate but may indirectly impact your traffic and AOV.
Sit down and carefully consider all variables that may contribute to your macro-data points. See if you can list fore unique variables that will impact traffic, conversion rate, and AOV. Now, create a strategy to improve all 12 micro-data points. Set specific data improvement goals and go to work obsessively trying to meet those goals. Perhaps the most important thing you can learn from this process is where not to focus your energy. If you cannot directly or indirectly link a component of your marketing efforts to one of your three macro-data points, eliminate it from your strategy. Just remember, digital strategy is micro-optimization. You cannot increase your conversion rate unless you understand the micro-data make-up of that conversion rate.
If you would like more information on creating your micro-optimization strategic plan please contact us for a free one-hour digital marketing consultation session. We are here to help you grow your digital business!
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Originally published at www.arcanestrategies.com.