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2   Developing A Multi Channel Marketing Strategy   Profitable Multi Channel Marketing   March 2010
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2 Developing A Multi Channel Marketing Strategy Profitable Multi Channel Marketing March 2010

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Developing a Multichannel Marketing Strategy …

Developing a Multichannel Marketing Strategy
The lifeblood of any business is its active customer base, how then do you plan your strategy, tactics and budgets for acquisition, development and retention?

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  • 1. Developing a Multi Channel Marketing Strategy www.sterlingmarketing.co.uk www.ivantage.co.uk
  • 2. Where to begin?
    • Key issues:
    • What are my sales targets for each channel?
    • What is my target operating profit?
    • How much can the business afford to spend on marketing to deliver the profit objectives?
    • What profit contribution can I expect from my customer base?
    • How much can I afford to spend in acquiring a new customer?
    www.sterlingmarketing.co.uk www.ivantage.co.uk
  • 3. Developing Sales targets per channel
    • Business 1 – strong retail base, investing in more shops > growth potential, channel switching from mail order to online
    • Business 2 – strong online base supported by trade sales > potential to grow online but minimum slow growth
    • Business 3 – small business aimed at older customer, slower rate of channel switching
    • Sales planning should look at growth over last two years and in the next year, objectives for the business, cash available to support any growth, channel migration
    www.sterlingmarketing.co.uk www.ivantage.co.uk
  • 4. Establishing Marketing Budgets
    • Marketing budgets are established to achieve overall business objectives
    • In these examples the budget has been cut back as % of total sales to improve profitability
    www.sterlingmarketing.co.uk www.ivantage.co.uk
  • 5. Target contribution from Marketing Activities
    • Before detailed planning by each activity assess overall contribution you need to cover operational and fixed costs plus profit requirement
    • The required contribution will focus the marketing spend on:
      • Assessing what has worked in terms of contribution order order
      • Optimising sales and contribution from customer base
      • Developing profitable areas of new customer recruitment
      • Testing new ideas
      • Minimising risk from un proven activities
      • Developing increased customer loyalty
      • Optimising customer contact strategy
    www.sterlingmarketing.co.uk www.ivantage.co.uk
  • 6. Importance of customer base
    • The figures below show the importance of 0-24 mth customers in providing the contribution for the business
    www.sterlingmarketing.co.uk www.ivantage.co.uk 100% £1,048,327 100% £884,735 100% £3,211,874 Grand Total 24% £248,246 32% £287,414 28% £904,983 New Customers 9% £98,107 31% £271,755 20% £636,868 Non-Active Buyers 67% £701,974 37% £325,566 52% £1,670,022 00 - 24 Month Buyers % of Total contribtn Contribtn % Total Marketing Cost Total Marketing Costs % of Sales Sales Customer Group Business B 100% £161,783 100% £282,421 100% £1,175,753 Grand Total 17% £27,027 46% £130,841 36% £420,454 New Customers 1% £2,027 17% £47,249 12% £135,250 Non-Active Buyers 82% £132,729 37% £104,331 53% £620,049 00 - 24 Month Buyers % of Total contribtn Contribtn % Total Marketing Cost Total Marketing Cost % of Sales Sales Customer Group Business A
  • 7. Drive more contribution from your active customer base
    • Understand the way your customer shops across the channels
    • Understand channel and activity overlap > existing customers responding to new customer activities (ppc, affiliates, adverts, inserts), direct channel driving retail sales
    • Develop customer groups based on propensity to purchase
      • Mix of frequency, recency, channel, spend
    • Develop effective contact strategy to these groups:
      • Frequency of contact
      • Format – e-mail, catalogue, cards
      • Targeted promotions
      • AOV builders
      • Optimise contribution
    www.sterlingmarketing.co.uk www.ivantage.co.uk
  • 8. Develop a modelling tool 37 views of data taken to optimise contribution Mailing size optimised Option 37 selected with segmentation variables of lifetime order value, frequency, recency & channel preference
  • 9. New Customer Recruitment Planning
    • How many do I need to recruit >leaking bucket syndrome
    • How much can I spend per new customer
    • How do I budget for overlap with existing customers (ppc, affiliates, advertising, inserts…)
    • How do I track channel interface i.e offline driving sales at retail, online driving sales at retail
    • How many were recruited last year at what cost
    • Planned volume and average cost this year
    • Lifetime value for different recruitment routes
    • Growth opportunity for each recruitment route
    www.sterlingmarketing.co.uk www.ivantage.co.uk
  • 10. New customer requirement to grow the business
    • Develop a tool to determine the volumes of new customers required to reach sales goals
    • Determine marketing budget required to achieve these goals and investment available
    • Determine sales growth rate relevant to your business niche
    www.sterlingmarketing.co.uk www.ivantage.co.uk
  • 11. Forecasting Tool Input historical actuals for housefile & new customers New Customers Number added Average no. of orders Average order value £ new buyer Demand % of total demand Growth Extrapolate to forecast future growth. Adjust volumes of new customers to calculate impact of total sales. Housefile % retained Number retained Average no. of orders Average order value £ per buyer Demand % of total demand
  • 12. How much per new customer
    • Assess lifetime value overall and for specific recruitment activities
    • Determine actual marketing cost and profit / loss per new customer
    • Determine actual sales in year 1 and beyond
    • Determine profit / loss per new customer in 1 and beyond
    • Determine profit objectives in year 1 and beyond
    • This determines marketing investment that is acceptable to your business model
    • Examples:
    • High end fashion retailer with frequent high order value purchases> higher investment level
    • Maternity business with limited lifetime relationship > maximum profit from first order
    • Seasonal business with mid to low average order value > recruit at above break even
    www.sterlingmarketing.co.uk www.ivantage.co.uk
  • 13. Determine overlap with existing customers
    • Activities with overlap:
      • Advertising
      • Inserts
      • PR
      • PPC
      • Affiliates
    • Allocation of marketing costs?
    www.sterlingmarketing.co.uk www.ivantage.co.uk
  • 14. Use prior year results to plan future strategy www.sterlingmarketing.co.uk www.ivantage.co.uk
    • Review:
    • Number new customers year on year
    • Cost of customer by activity year on year
    • Target numbers and target costs by activity
  • 15. Reactivation versus New Customer Recruitment
    • Allocating spend = cost per reactivated customer versus new
    • Ways to improve performance:
    • Profile non active file versus active to target best prospects
    • De dupe external lists / multi pool to determine actives elsewhere
    • Use data pools (Abacus, Transactus, Experian) to target those actively purchasing similar products
    • Use less expensive communication formats – emails, cards / mini catalogues (last chance)
    • Promote
    www.sterlingmarketing.co.uk www.ivantage.co.uk
  • 16. Minimise Risk
    • Test and roll out
    • A B testing
    • Low cost options
    • Proven routes
    • Effective data analysis
    • Review constantly
    • Be flexible to adjust spend in line with performance
    www.sterlingmarketing.co.uk www.ivantage.co.uk

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