5 Things Data-Driven Marketers Need to be Doing Right Now
As an agency, we work with national and international businesses across a number of verticals. What we see is that every company is in their own unique situation. Some companies have massive increases in demand, while others are shut down completely for the short term.
If your business is not shut down completely, then for the data-driven marketers among you, this is your time! You can help protect and even save your business. Here are the five most important things you should be doing:
1. Have situational awareness – What is your data telling you?
Every business is different and is being affected in different ways. Effects fall on two axes. The first is demand for your product or service and the second is your ability to maintain business continuity. It doesn’t matter if demand for your business is way up if you can’t deliver your product because your product is a live event, or you sell physical products and your fulfillment center is shut down. We have clients for whom demand is up, but maintaining business continuity is an issue. Conversely, we also have clients who easily moved to remote work, but demand has fallen dramatically.
2. Check your cohort data – Is what you think is happening actually happening?
It is easy to assume things are bad everywhere or that the drop in sales from the week everyone moved to work-from-home will be the trend for the future. Looking at cohort data and following it over time will help you understand where your market actually is, not where you guess it might be. If leads remain of high quality and are maturing in the sales funnel, you might not have the problem you think you have. If clients are signing up but not paying, then you will need to re-think your monetization model. The good news in all of this is you can choose how to act but your actions will be much more effective if you know to what you are reacting and what you hope to achieve.
3. Separate out volume differences from client value differences
If you are optimizing to any kind of cost-per-customer acquisition target, these two situations are vastly different. If your client value has not dropped, you probably don’t need to change your CAC (Customer Acquisition Cost) target (unless it is a bad target or you have cash flow issues–more on this is a bit), but you need to plan on your volume targets being affected. If your client value is also down, you need to re-assess your CAC target before you do anything else. Trying to find more volume on a bad CAC target is a fast track to ruin.
4. View budgets through a cash flow lens
Most marketers look at cost-of-acquisition regardless of the latency from the time of advertising investment until the revenue is realized. But across the globe, cash is now king. If you are a pre-profit startup, you should be tightening down on your payback cycles around cost-per-acquisition. Whether a startup or established company, make your marketing dollars more efficient in order to help the company weather any expected cash flow issues. Talking to your CFO is highly advisable right now.
5. Re-visit your CAC targets
When we take over our client’s marketing, the most common issue we run into isn’t technical implementation in the ad accounts, it is poorly thought-out CAC targets. Marketers typically are unaccustomed to dissecting fixed vs. variable costs, volume vs. per-unit efficiency, or sales cycles. But all of these are required to have a strong CAC KPI that is tightly aligned with the magnitude of Contribution Margin (post-marketing gross profit) being produced by advertising. If you don’t have a CAC target that: 1) is based on client profit generation, 2) varies by client value, and 3) takes into account the timing of revenue generation, you need to hustle now! Again, talking to your CFO is a good idea, as is getting really intimate with your company’s profitability metrics. Any decision you will make about marketing as a company will hinge on how good your client value information is and how well you use it in managing advertising decisions.
Good luck! As we found out in the 2008-2009 Great Recession, data-driven marketing based on financial data was the secret weapon of all our clients in surviving times just like these by protecting the bottom line while not abandoning growth. It is possible to find opportunity even in the most adverse of times! It is time for data-driven marketers to play their part.