Hello friends, and welcome to this edition of The 20 Percent.
Most marketing conversations inevitably lead to the topic of ROI. Many entrepreneurs believe that “For every $1 you put into marketing, you ought to make $2 back,” or so the argument goes.
It’s a difficult argument to disagree with. It feels intuitively right. And it couldn’t be more wrong, for the following couple of reasons:
- When you discuss ROI, you turn a marketing conversation into a money-making conversation. And that’s a whole lot different kind of conversation.
- Digital marketing is not billboard marketing. People read billboards, whereas they interact with technology. Because of this, how you define ROI changes everything.
If Not Double Your Money, Then What?
Let me explain. If you run a brick-and-mortar business, it’s not unusual for people to walk into your store. And perhaps one in every ten people who visit your store make a purchase decision on the spot.
With a small traditional marketing push, you could bring these numbers up and make $2 from your $1 marketing investment.
But online, it’s an entirely different story. Just because you opened an online business doesn’t mean that people will visit your site. And those who will arrive will be looking for trust and credibility signals. When was the last time you looked for client testimonials on the walls when you entered a brick-and-mortar store?
The secret to winning in online business is simple: Focus on those things that can’t work offline.
Similarly, the secret to winning in a brick-and-mortar business is focusing on those things that can’t work online.
Two Digital Metrics You Should Be Focusing on Instead
You are getting this email because you gave me permission to send it to you. Attention is scarce, and permission is the privilege to deliver anticipated, personal and relevant messages to people who want to get them. These messages can take different forms and shapes, from remarketing ads to emails, memberships and more. Permission is both easy to measure and hard to get. It’s the reason why there’s so much SPAM on the web.
2. Network effects
Network effects create defensibility. They are not the digital equivalent of word of mouth. They have nothing to do with going viral or getting new clients. Network effects create moats. Personal network effects are in play when a customer is influenced to join or stay with a business through their (online) network. Use your marketing wisely to build a support network of your biggest fans, best customers, and partners.