Digital offers growth potential for businesses of all sizes. The challenge is how to assess the scale of an opportunity, how much to spend on it, and how best to manage the resources you employ to deliver growth, says James Hammersley of Good Growth
Many directors are digital immigrants and are either wary of a serious commitment or feel forced to employ ‘experts’ and then worry about whether they are getting real value from them.
Good Growth has built a real understanding of what to do, and how to do it. We recommend that you should take these steps:
Build an informed opinion about digital
Digital will play an ever-increasing role in your business, whether through engagement, acquisition, conversion, retention or service.
This may be through email, your website or social media. It can be aggregated, counted, measured and tested against a commercial goal.
Master key performance indicators
There are a host of measurements that are specific to the digital world. Once understood, they can provide business owners with useful data. The key measures are:
- Conversion – the percentage of users to a home page, or the first main sales landing page in a funnel that completes a transaction. If the channel drives people to a voice centre then the website number needs to be different, so calls generated by online activity and their ultimate conversion can be gauged. Conversion will help you understand the commercial performance of the digital channel.
- Revenue per user – the average value of each transaction measured over the standard time period for conversion reporting. Revenue per user will also help you understand the commercial performance of the channel.
- Traffic sources – the number of users who land in your channel, reported by source and compared to the same period in the previous year. This will also be measured on a 12-month moving average trend. Traffic sources will help you understand the impact of your proposition in the marketplace.
- Cost per sale – the ultimate cost of digital marketing investments, including PPC (pay per click), direct email and banner advertising. Cost per sale will help you understand the effectiveness of digital marketing investments.
- Funnel effectiveness – the key product funnel performance showing exits/entrances at each stage and ultimate conversion effectiveness. Choose up to four of your bestsellers to gauge activity.
- Customer surveying – shows you how many surveys have been carried out in a month as well as the key findings. Surveys will help you understand why customers do, or do not, buy.
- Hypothesis creation – this will show how many hypotheses have been created in a month. It will help you explore customer behaviour.
- Testing – this will help you understand more about customer behaviour.
- Process effectiveness – measuring this will allow you to implement lessons learnt.
Ensure the business can respond to customers
Build a world-class digital business process as a core capability – and drive it as hard as any other channel to market.
The key to digital success is simplicity and a core process that is understood and owned by commercial leaders.
Many organisations have built large, complex teams to operate digital channels. As a rule, a large headcount increases cost and activity but less often does it generate profitable growth. In our experience you don’t need many people to make a real difference.
Build a culture of ‘test and learn’
Without spending a great deal of money, digital can provide you with customer insight that isn’t available elsewhere. Encourage your business to use digital to test new ideas, propositions and routes to market.
James Hammersley is a founding partner and director of Good Growth, a digital change consultancy which has worked with The Economist, Barclays, Bupa and Manchester United FC