Performance Marketing. Why, when, and for whom.
Performance marketing is one of the more evolved and professional solutions we find when supporting the market development of new product or service ideas (of business, generally speaking).
I’ll try to explain it in a nutshell.
Working in “performance marketing” (to us) means to take on part of the risk you should’ve faced alone. After all, every business initiative has a risk component and, in the most cases, success depends on a good assessment of these risks — from the risk assessment tools you use and from the chosen managing partners.
To each valuable project you should, hence, match the right tools and people.
In fact, you might happen to have an excellent idea or to think that it is, but not to have the necessary economic resources, energies, or the time to materialise and launch it. Or, maybe, your company spun off a product or a service that, due to all the differences in the concepts and operations, requires a complete redesign of your managers’, partners’, and employees’ mindset and skills. And thus, it cannot produce the expected — or at least relevant — revenues or it even produces significant losses.
Well, you can performance marketing to launch new initiatives or to correct those that do not work as you expected.
In these cases, the best thing to do is to rely on a definition (or review) of the financial, marketing, and human resources KPIs.
It is exactly from here that performance marketing starts off, from a deep analysis of the business model (how much do I reckon I’ll earn, at what costs, with what services/products).
In this way, you move on to a strategic study of the marketing solutions — to whom, for what reasons, with what message, and with what tools and potential deadlines — and share quantitative and qualitative goals.
The crucial elements: constant analysis and reading of the standards.
The next step is to kick off your activity and, according to the expected and real and analysed KPIs, you constantly adjust and modify all your chain, up until you reach the best of your operativity.
The chain, the path through which you carry out the performance marketing activity, involves a number of dimensions we can regroup in three macro-categories:
- Search & Engage
- Land & Convert
- Sell & Retain
In the digital dimension, as it also was for the real-life dimension, for each of these there are specific sets of tools, which transform an unknown user (although not for interests and/or location, assumed from the initial studies on the product/service, customer base, and goals) or a generic “fan” in a “suspect” — someone that has knowledge of your product/service but that still has no interest — then in a “prospect” — someone that manifested a certain interested in your product/service but that still has no need — then in a “customer” — someone that needs your product/service and chose it — and then in a “loyal customer” — some that enjoyed the experience, is happy about it, and keeps using the product/service through time.
User → Fan → Suspect → Prospect → Customer → Loyal Customer
These tools are great in number and, obviously, they call for the need to arrange a captivating and convincing message, in addition to being authentic, in the digital world or more generally throughout the media.
However, to get to know the customer’s “name and surname” it’s undeniably essential to get some communication channels and direct contact going, relevant to all the different “call-to-actions” (CTAs) spread according to the kind of content and user.
At that point, you should start to manage the generated lead, in a limbo in between the customer journey and the customer experience (perhaps, less probable in the process of product sales, where the lead management focuses more on the post-purchase stage, from a remarketing and brand loyalty perspective, but possible nonetheless).
From a philosophical point of view, all this develops in partially imaginary time, that of desire and ambition, and partially real, that of purchase and possess, where the brand serves as a “touchpoint” with the user. The first stage represents the customer journey, the second the customer experience. But we will deepen this in another article.
How do we proceed from here?
The potential operative structure is that of a virtual “joint venture”: costs are divided during the design and the management of the strategy (the agency provides a free operative contribution with its tasks, namely working equity), while at a later stage results are shared (revenues share) according to commercial agreements based on the conditions of the operative stage.
In details: WHAT IS AND WHY YOU SHOULD CHOOSE IT.
To start off a market activity, whether you provide a service or sell a product, needs tools that can guide your potential customers’ choices: you need to design a communication strategy that makes your business profitable and competitive.
To do so, you will incur in significant costs. But if you believe in it, we will too. We can find solutions that allow you to reduce the costs of your investment, up until the development of a win-win partnership.
How does it work?
- Analyse the business model (what you want to do or intend to do, to whom and with what goals).
- Compare the market’s and the competitors’ state-of-the-art.
- Study the potentialities.
- Calculate the costs of the “engage-land-convert(sell)-retain” chain and understand how much it is to acquire and maintain a customer.
- Identify the markup on the product/service.
- Design solutions to increase the ROA (return on marketing expenditures) and the ROI (return on investment).
- Develop a partnership with the customer to share the profits generated by the communication strategy and, thus, from the activity.
The benefits?
- Reduction of initial costs of development;
- Drastic reduction of management costs for marketing activities;
- Trust increase in the relationship;
- You won’t have to face costs not related to results or accidents.
In conclusion, this is not an ordinary path, but it has substantial potentialities that could bring to significant operative results for the company — besides increasing its operative culture towards cooperation and a mindset fit for rapidity and flexibility.
Very useful concepts in an everlasting chaotic dimension — as defined by Philip Kotler and John A. Caslione in “CHAOTICS”, not a recent book, but still extremely topical.
Una version italian dell’articolo è disponibile a questo link.
