The digital marketing landscape can feel like a minefield. Every day new strategies, guidelines, and best practices seem to be sprouting up for engaging on social media, branding across channels, and establishing authentic digital relationships with customers. But as much as the digital revolution has changed the way marketers approach their jobs, it’s also reinforced some of the core principles of great marketing. At the end of the day, you need to be smart about how you find and keep your customers.
Here are five missteps to avoid:
1. The misstep: Focusing relentlessly on minimizing cost per acquisition (CPA). At first glance, minimizing CPA seems logical—why spend more acquiring customers from one channel when you can get them less expensively from another? But the snag is that not all customers are created equal. You may have noticed that some customers tend to stick around and make repeat purchases, while others are “one and done” or only respond to steep discounts. And if you could identify those great, high-value customers off the bat, wouldn’t you be willing to pay a little more for them?
The save: Look at customers’ long-term value by channel, ad network, affiliate, campaign, promotion, or keyword to hone in on which tactics are bringing in the highest-value shoppers—and where you should be spending more rather than less to acquire customers.
2. The misstep: Using ineffective segmentation. You’ve been in the situation. Someone from the team comes up with what seems like a brilliant segmentation strategy. Only there’s no way to get the data you need to act on it. Or it requires hundreds of different creatives. Or it turns out that what you’re segmenting on doesn’t actually correspond to differences in customer response.
The save: Make sure you’re segmenting on data that you can actually capture and that drives meaningful differences in customer behavior. And follow an 80/20 rule: Identify the two or three differentiators that drive 80% of the results, but at 20% of the time and expense.
3. The misstep: Obsessing over the wrong metrics. With the proliferation of data on what your customers are doing online, it can be difficult to know where to focus. The problem comes when marketers confuse tactics with goals. Your goal as a marketer is to maximize your customers’ long-term value to your business. Boosting open or click-through rate and increasing engagement metrics like social media buzz or Facebook likes are all tactics. Even maximizing purchase conversion is a tactic. (If the goal were merely to increase conversion, it would be easy: a 95% discount would probably do the trick.)
The save: Figure out why you’re measuring the metrics you are, and which ones are linked to customer lifetime value (CLV). Those are the ones that you should be focused on tracking and maximizing.
4. The misstep: Neglecting the baseline. It’s easy to tell if an idea is working or not, right? Actually, unless you’ve set up a control group, it can be tough or even impossible to figure out what’s driving your results. For example, are your VIP customers opening emails at a much higher rate than your overall list because the specific email creative is resonating more with them, or because VIP customers are just more likely to be engaged with your brand in the first place?
The save: Unless you’re working with a sophisticated data science team, focus on testing one strategy tweak at a time—things like segmentation, creative, or offer. Make sure you’ve got a randomized holdout group that won’t receive the new “treatment” so that you can measure the delta directly attributable to your new idea. And remember the motto ceteris paribus—all else equal. This means that everything that’s not being directly tested should be held constant: You should draw from the same customer group and test your ideas at the same time.
5. The misstep: Comparing apples and oranges. Any marketer who has tracked a group of customers over time knows that there’s a predictable pattern, sometimes referred to as the customer lifecycle. Even with the best of retention efforts, not all customers stick around—over time some just naturally leave for competitors, move away, or drop out of the category altogether. The problem comes when marketers lose sight of this near-universal phenomenon. If you’re comparing the average revenue per week for a group of customers who made their first purchase last month with a group who first bought two years ago, you’re comparing apples and oranges.
The save: It’s critical to be able to get a head-to-head comparison of different customer groups to see how your acquisition, retention, and engagement efforts are trending over time. But the key is to make sure you compare them at the same fixed point in their own lifecycle—say, the third or sixth month since they made their first purchase. Cohort analysis is one tool that savvy business intelligence (BI) teams use to compare different customer groups in exactly this way.
Ultimately, the explosion of e-commerce and digital marketing hasn’t changed the rules of the marketing game—just the arena. Regardless of whether marketers are e-commerce novices or veterans, avoiding these common missteps can help ensure that they’re positioned for success.
Corey Pierson is cofounder of Custora.
