The year 2020 saw retailers frantically implementing digital marketing tools they had not used before. Many embraced platforms e-commerce platforms that could share data with their POS systems. Others chose builders like Shopify and Square. Suddenly, e-commerce was accessible.
What was somewhat lost in the process – or perhaps wasn’t well understood to begin with – is that digital marketing isn’t one thing. It’s a discipline, and like all disciplines, there are many paths.
Let’s use an analogy to illustrate this point. I have friends, husband and wife, who are both practicing architects with degrees from the same university. The wife is a commercial architect with a specialty in sustainability. Her work is focused on building multiuse (office, industrial) facilities with sustainable infrastructure and systems. The husband is a residential architect who designs single-family homes for a custom homebuilder. They are both architects, and they use many – but not all! – of the same tools and skills. But they use them in remarkably different ways to create very different end results.
Similarly, digital marketing involves a broad range of tools and practices, and to do digital marketing well, it’s important to understand the tools and their applications. But a high-end store with an average price point of $150 should (must!) use the tools in a different way than a smaller store that specializes in products with an average price point of $8. A store with significant retail real estate and a large inventory should (must!) use the tools differently than an internet pureplay that offers only easily shippable products.
Use the tools wrong – or the wrong tools – and you can waste a lot of advertising dollars, permanently reduce your average order value, and find yourself serving the wrong customers.
For example, a store owner who also sells high-end custom garden benches went to a tremendous amount of effort to build out a Shopify site, taking photographs of and writing product descriptions for each item. That wasn’t necessarily a mistake – most high end items take some time to sell. But the store owner was convinced by a local advertising agency to invest in PPC (Pay Per Click) advertising to attract more traffic to his site. The problem is that the ROI for PPC won’t work, because there is no volume potential for high-end custom benches, and besides – the price points were too high for PPC. The retailer wasted a lot of advertising dollars. He would have been much better off using an email strategy to communicate with his longtime clients that he knew had the real estate for big garden supplies, supplemented by using Shopify’s direct links to Facebook to highlight the products in the Shopify store.
In another example, a 12,000 sq foot retail store with a gift and housewares business also committed to PPC and the starry-eyed belief in big online volume. They did sell many items – all under $150 each, and not nearly enough to pay for the advertising – and their staff was often busy with packing and shipping small orders when they could have been consulting with their more loyal customers. Furthermore, the PPC advertising (though PPC stands for Pay Per Click, I like to call it Price Point Crush) attracted a different clientele than the store typically serves. It’s too early to say, but there’s a good chance these customers will not turn into the kind of long-term, devoted buyers the store must cultivate to remain profitable.
Here are two important steps you can take to avoid these traps.
The first is to be exceedingly clear about your target customer profile. Before you pay for any advertising or create any new website promotions, do the work of describing your customer. Where does she live? Where does she shop? What other products does she buy? What kind of house does she own, and how does she furnish it? What is her household income range? What social media does she use? How old is she? You can even go so far as choosing an icon to represent her in your mind. Is she Julie Andrews or Julia Roberts? Is she Reese Witherspoon or Christina Ricci? If you keep your target customer in mind when planning your advertising, you will make much better decisions.
The second thing is to be very clear about your financial targets. What is your average order size and average margin? What are your goals for each metric? Weigh every advertising and promotional idea against these targets to be sure the digital marketing you pay for will move your financial needle in the correct direction.
It is a good thing to embrace digital marketing. Now, we just need to keep our customer and financial targets in mind, and remember . . . just because you can, doesn’t always mean you should.
This article was contributed by GCS 2022 speaker Andrea M. Hill
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