No business has an unlimited marketing budget. When you are deciding where to put your money, it is a good idea to use information technology and the available digital tools to analyze what marketing to do and when to do it. Keep in mind that no piece of software or tool is without limitations. Using two or more tools may help you get a better idea of how to allocate your marketing funds. You can also use these top seven strategies for managing marketing risk and getting the best possible return on investment for your marketing dollars.
Leverage the Right Technologies
There are many tools that you can use in order to maximize your return on investment. Once you’ve identified specific ways these technologies can be leveraged for cost reduction, reach maximization and conversion optimization, then you can move forward with acquiring the necessary IT systems so that you don’t overspend. Keep in mind that information technology changes at a rapid pace, and a tool that meets your needs now might not be the best tool in one or two years.
Don’t Focus on a Single Silo
Most businesses have a target demographic who they aim to reach on social media. However, concentrating all of your marketing dollars on a small segment of the population puts your investment at risk. Avoid depending on a small population for the majority of your site visits and conversions. If you only focus on one social media venue and one group on that venue, you could be missing out on a lot of sales.
Consider Key Performance Indicators
In order to evaluate a marketing campaign and determine the level of risk that you are willing to accept, you need to set your key performance indicators. These are everyday measures of your daily operations. Some examples of key performance indicators include how many hits your website has, how many visitors buy something, and how many people abandon their digital shopping carts. Google Analytics provides these details. These indicators provide information that you need to establish your risk indicators and tolerance levels.
Establish a Tolerance Level for Different Types of Marketing Risks
Use technology to establish your tolerance level for risk. The tools that run your marketing campaigns may offer analytical tools to measure the campaign’s effectiveness. For example, Mail Chimp can be used to send out marketing emails to your subscribers and also tells you how each campaign performed. Maybe you are comfortable with a 90% fail-to-click rate on an email campaign because marketing emails are notoriously ineffective, but they are also cheap. The cost of sending 1,000 different marketing emails may be less than what you would spend running one ad on Twitter. When a marketing strategy has a low cost, you might be more comfortable with a higher risk because you won’t lose much of your investment.
Use Technology to Track Key Risk Indicators and Tolerance Levels
Google Analytics is one of many tools that you can to track your key risk indicators. Key risk indicators look toward the future of your business. If one of those risk indicators is breached, it requires you to take action. For example, if you have a pay-per-click (PPC) ad campaign running on Facebook, your key risk indicator for the campaign might be 10,000 clicks with less than a 10% conversion rate. At this low of a conversion rate of clicks turning into paying customers, the ad campaign may not be worth the money that you are putting into it. You might want to end the campaign and switch to a new strategy once your conversion rate, as a key risk indicator, drops below a certain threshold.
Another way to make SaaS, Google Analytics and other types of technology work for you is to automate your reporting. Doing this will save you a lot of time. You can set up the reports to go to everyone on your team who needs the information. You might want to look at email conversion rates on a daily basis for each email that you send.
You could also set up reports for different parameters related to the same marketing campaign. For example, you could look at marketing risk on a per-person basis. Perhaps there are segments of your target population who never open your emails, never use the discount codes, and never click on the PPC ads you run on social media and search engines. You could also automate reports on parameters such as the time of the day people tend to click on your ads or which types of ads get the most clicks, such as a flash sale or dollars-off marketing campaign.
Make a Plan of Action
Once you have allocated your marketing dollars based on an acceptable level of risk, make a plan of action. Establishing key risk indicators and tolerance levels is not useful unless you know what you will do when that threshold is reached. Your plan might include actions to take for minimizing risk. A sound plan of action may also include ways to share or transfer the risk. For example, if you’re concerned that a PPC ad campaign on Twitter will not reach your desired conversion rate, you could include a clause in the agreement that, if that happens after a certain period of time, the firm managing your ad would show it to a different audience or show it at different times of the day.
The importance of risk management is often overlooked in the areas of marketing and information technology. Including risk management as a part of your marketing plan makes it easier for you to identify what is working, what is not and when a change in strategy is needed. These seven strategies simplify the management of risk for the marketing needs of any type or size of business. By working with Thirst Productions and employing modern technology, apps, and software, you can make the task of risk management less onerous and more useful to your organization.