If you’re like most small-business owners, you spend your day providing a great customer experience that sets you apart from your competition. The quality of your service is key now that digital word of mouth is the most effective form of advertising. This doesn’t leave much time to stay current with the latest online-marketing developments.
To help navigate today’s brave new world of digital marketing for small business, as well as outline principles that are critical for your success, I’ve outlined eight terms that should be in every small-business owner’s vocabulary. Understanding the “why” and “what” will improve your marketing efforts and ability to attract and retain valuable customers.
1. Online presence
What: Your online presence is everywhere your business info can be found online and on mobile apps.
Why: In today’s connected world, establishing a proper online presence is absolutely critical. Consumers use the web to make their final decision. According to a Nielsen study, four out of five Yelp users visit the review site before making a purchase.
Whether looking for a new business or researching a known one, potential customers will use search engines and social platforms to find the information they need.
What: A call to action prompts a customer to do something (for example: “Call now.” “Click here for 10% off.”). Testing different CTAs as part of your marketing will help you find out which is the most effective for your business.
Why: As a small business, it doesn’t matter how enticing your online presence is if you do not present a clear call to action. Even the most interested consumers need a clear next step and possibly an incentive to move forward.
What: Conversion is the step from your marketing effort to a customer taking action. A conversion could be an email or call, but most often a direct purchase.
Why: The goal of your marketing should be to drive conversions. You need to decide in advance how you define a conversion. This way you know what to track and what you want to achieve.
You want to minimize drop off between someone seeing you online and actually making a purchase. Remarketing can help with this.
What: Remarketing is following up with consumers that have interacted with you or your marketing before. For example, sending email or a text messages to existing customers with the goal of building loyalty or getting referrals, feedback and reviews.
Why: Remarketing to your existing customer contacts is one of the most important online-marketing activities for small-business owners. These customers already know your business and are much more likely to engage and convert via effective marketing.
What: Referrals are new customers that have been directed to your business by other customers or companies.
Why: A trusted recommendation is more powerful and effective than any type of advertising. By using targeted-remarketing messages you can encourage this type of digital word of mouth.
What: Customer acquisition cost refers to the dollar amount spent to acquire a new customer. For example, if you work with a marketing service that you pay $1,000 and because of their work they deliver five new customers, the CAC of this marketing effort is $200.
Why: Your end goal is new customers and revenue. It is important to understand how much each of your marketing efforts cost to achieve that goal. This will help you evaluate your marketing efforts. Make sure you know about the CAC when working with a marketing service.
What: Customer lifetime value is the dollar value of a customer relationship — based on the total profit you expect to earn from that client over their time with your business. So if your service costs $50 and customers generally buy this service five times throughout their lifetime, the combined dollar value of all these transactions, or CLTV, is $250.
Why: CLTV is an essential concept in marketing, because it determines how much you can spend on your marketing. Generally speaking, any marketing effort where the CLTV is higher than the CAC delivers a return on your investment and is something you should continue to invest in. So don’t just look at marketing in terms of costs but how it adds to your bottom line!
8. Cloud computing
What: Cloud computing, sometimes called software as a service or web-based software services, simply means business services such as email, storage or accounting supplied over the Internet. Using the cloud is increasingly popular with small-business owners because it’s more affordable and makes it easy to update the services.
Why: Using cloud computing for your marketing is a smart approach as it’s affordable and makes it easy to update and integrate any services. For example, customer-relationship-management software is a marketing tool that many large companies have been using for years, however it is now well within the price point and time-commitment range for small-business owners.