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Lesson 2:
How Inbound Marketing Saves Businesses Money As They Grow
How Inbound Marketing Saves Businesses Money As They Grow
Sam Mallikarjunan is one of the most respected marketers in the business - he’s currently the Principal Marketing Strategist at HubSpot, where he has worked for the past five years. In the past he was the Head of eCommerce Marketing and Head of Growth at HubSpot, and now teaches Advanced Digital Marketing at the Harvard Division of Continuing Education, so he knows a thing or two about taking eCommerce businesses to the next level.
In this lesson, he shares how inbound marketing can help businesses reduce costs, increase customer lifetime value, and build customer centricity into their core values as they scale.
So let’s start with the basics, especially for those of you unfamiliar with inbound marketing.
What is inbound marketing?
If old school “outbound” marketing is about who can most effectively interrupt consumers (using ads in TV shows or cold calling them while at dinner, for example), inbound marketing is the concept that it’s more economically efficient to acquire customers by attracting them to your site.
Instead of the most disruptive marketers winning, the most helpful marketers win.
Why does inbound marketing matter for growing businesses?
When you’re trying to scale a business, being economically efficient is imperative.Not only does inbound marketing lead to less expensive site traffic and conversions, it also generally has a higher customer LTV and customer purchase rates.
How will inbound marketing help you take your store to the next level?
“Customer centricity” is probably one of the most over-used business jargon terms in the last few years, but it has an important and specific meaning.
A customer-centric business is a business where acquiring a specific “persona” of customer is the unit of economic value that the organization solves for.
You spend a certain amount of money to acquire a customer of a specific buyer persona, and then nurture repeat business transactions from that customer over the course of their lifetime.
This is the real key to growth: not treating your customers as single transactions, but looking at their total value and marketing in a way that you maximize customer retention this over time.
A key element of inbound eCommerce marketing plans is building up detailed personas of your target audience.
A buyer persona is a unique way to define an audience, because it evolves beyond simple demographic segmentation (age, gender, income, location, etc.) into psychographic dimensions (specifically the use cases and pain points your product or solution addresses, levels of sophistication, responsiveness to different types of messaging, etc.).
Tying back to the customer-centric business, every type of buyer persona will naturally have a different cost to acquire and a different lifetime value.
By tracking this, and understanding the relationship between how much it costs to acquire a customer vs. the value that customer brings to your business, you can make intelligent decisions around what types of buyer personas you want to focus on attracting (or exclude from attracting).
There are two ways that you can gather valuable feedback from your audience: implicit and explicit data.
Explicit data are things that customers specifically tell you. This can be in the form of user reviews, surveys, or other knowledge you gain through interactions with customers.
For example, if you’re selling home improvement tools, you can ask your customers what projects they’re working on, what level of experience they have, or any other qualifying questions that allow you to personalize the marketing that you deliver to them in the future.
This also allows you to do the buyer persona segmentation (e.g. “experienced craftsmen” and “weekend DIY-ers” may have different costs to acquire and different lifetime values — by identifying each customer into one of those types you can make intelligent decisions around where to invest in your marketing to attract more of the very valuable personas).
Implicit data is data that you gather from customers based on their buying behaviors or information from third party sources. Pages they view, web elements they click on, and other behavioral information can be aggregated into a holistic picture of how valuable customers behave and what actions you want to drive site visitors toward or away from.
By far, the most common mistake is thinking that inbound marketing is easy or will pay off quickly.
It’s not unusual for it to take 3-6 months of consistent content creation before you see an uptick in organic or social media site traffic — and that’s assuming you get the buyer personas right from the beginning.
On the bright side, companies that do it well consistently see far greater ROI from their overall marketing investments.
Good luck with your inbound commerce strategy – I promise that the benefits may not be immediate, but the long-term rewards are huge.
