Five Steps For Overcoming Barriers To Online Investment
McKinsey recently reported that the primary barriers to online investment are:
59% Insufficient capabilities (in-house and at their agency)
52% Insufficient metrics to measure impact
33% Difficulty of convincing upper management
24% Limited reach of digital tools
In addition, other factors including status quo mentality, misperceptions and business process may also prohibit investment.
Overcoming the Barriers: a 5 Step Process
Barriers to online investment are formidable, but not insurmountable. Below is a 5-step process for obtaining budget and building a foundation for online success.
Step 1. Educate your executives
One of the key takeaways from the 2008 IAB Conference was the need to educate executives on the trends in media consumption and the advantages of digital marketing. They need to realize customers are online and competitors are only a few clicks away. You can't afford not to compete in this arena.
Step 2. Develop an online strategy
Rather than one-off projects that have little chance of succeeding, a strategic approach is a must. Poorly designed, user-unfriendly web sites, and mixed bags of standalone Web initiatives are not atypical. Success starts with a plan.
An online marketing strategy should define the audiences, objectives, tactics, requirements and expected results, and there should be a clear link between online engagement and revenue. The strategy should also address how resources and capabilities will be obtained (internally or from an agency).
Step 3. Define metrics for success
The #2 barrier cited by McKinsey was insufficient metrics. Rather than tracking hits or visits, marketers should focus on metrics tied to business objectives (i.e. leads, sales, opt-ins, etc.).
Step 4. Build a Business Case
Once you have goals and metrics, create a business case and an expected ROI. Here's how to do it.
Assuming you close 1 in 10 leads (50% of leads become prospects, 20% of prospects buy) and each customer is worth $50,000, every online lead is worth $5,000 ($50,000 x 10%).
If you generate 10 leads per month, you should land one new customer worth $50,000. On a $5,000 monthly marketing budget, Return on Ad Spend (ROAS) is $10 ($10 in revenue for every $1 invested).
If you account for the incremental awareness, visibility and user engagement (sites often plays "assist" roles in engaging known prospects who want to learn more about you), the ROI is even greater. Studies show for every sale traced to the Web, 3-4 offline sales were influenced by the Web. If you account for this (even discounting by 50%), ROAS is now $30 (very compelling!)
If you present a business case that 1) is based on conservative assumptions, 2) can be easily understood by a CFO, and 3) produces a compelling ROI, you have a good shot at securing the budget you need to get started.
Step 5. Get Some Quick Wins
Once you get a budget, you now have to show results. As a new initiative, it's important to get some quick wins to validate your plan and provide credibility. Start with low-hanging fruit, or with what we call a "foundational approach" includes:
Optimize your Web site to convert visitors to customers. By improving site usability (easy to navigate) and marketing effectiveness (compelling message, content and calls to action), you will see more leads and higher conversion rates.
Test paid search engine marketing or "SEM". SEM can provide immediate results by validating search before you undergo a long-term effort to optimize for natural search rankings.
Develop e-mail marketing campaign. It is the most cost-effective, efficient and measurable way to communicate with and cross-sell existing customers and prospects.
While optimizing for search engines or creating a blog may be strategic, they often take longer to produce results. If you want the opportunity to implement "strategic" programs, you first need to generate some quick wins.
While barriers do exist, they can be scaled and overcome. You can find success by following the 5-step program above.