As shopping behaviors change, ecommerce marketers should change how they reach new prospects, deepen relationships with customers, and measure results. For at least some online retail businesses, this means experimenting with different marketing campaigns and activities at a strategic level and making good guesses about what might work.
It may be helpful to make a distinction between marketing experiments — or what we might call strategic marketing experiments — and marketing optimization.
Strategic Experiments vs. Optimization
There is a sense in which every marketer should always seek to optimize campaigns. Even established and successful promotional campaigns and tactics can be improved through A/B testing, research, data analysis, and subtle changes that produce better results.
Marketers presumably want each promotion to be as effective as possible, and every sort of retail business — from a sole proprietorship to a billion-dollar omnichannel chain — should optimize.
But businesses should also experiment — not to determine which AdWords headline boosted click-through rates, but to make significant shifts in how, where, and when a company markets.
Take the case of a brick-and-click retail business in the United States that has been in operation for more than 50 years. For the vast majority of that time, this retail business relied on circulars to help drive sales. A few years ago, these printed flyers accounted for the lion’s share of the company’s overall marketing investment both in terms of dollars spent and effort.
This retail business worked hard to optimize these circulars, paying close attention to product selection and offers, layout and format, and distribution. But shopper behavior changed. Fewer consumers subscribe to newspapers. The store’s customers increasingly rely on mobile devices for news and information. And these shoppers glide from mobile shopping to desktop shopping to in-store shopping and back again with ease and rapidity.
The heavily optimized circulars slid to a return-on-advertising-spend of just about a dollar in profit for every dollar invested. Thus the retailer looked at customer behavior and took some guesses about how to market to these shoppers.
While some strategic marketing experiments were failures, others produced much better ROAS, generating more than $20 in profit for every marketing dollar invested on a large enough scale to create about $875,000 in profit with just a $43,000 marketing investment in one particular case.
Leading Marketing Experiment
In the last few months of 2016, Google and Econsultancy surveyed roughly 500 marketers in North America about their marketing practices. The survey respondents were from large companies and held prominent positions in those companies.
Among its various findings, this report noted that leading marketers conducted “big bet” strategic-marketing experiments more often than what the report called “mainstream” marketers. The implication is that these big bet experiments contributed to better returns and more growth.
“The potential for experimentation in decision-making is an important difference for leading companies. They are significantly more likely than the norm to conduct all types of experiments, but the divide is widest when it comes to strategic experimentation,” according to the Google and Econsultancy report.
Marketing as ‘Liquor and Guessing’
Cartoonist Scott Adams, Dilbert’s creator, has not been kind to marketing. In October 2010, two of his Dilbert strips were particularly pointed.
The first, published on October 1, 2010, has a marketer in Dilbert’s company admitting that what he does is “mostly guessing.”
About three weeks later on October 20, Adams published a second strip about marketing. In it, a sales guy comes to Dilbert to ask if he can become an engineer. Dilbert tells him that he is not smart enough to be an engineer, so the sales guy says he might try marketing. Dilbert’s reply is that marketing is “just liquor and guessing.”
In light of the Google and Econsultancy study, it may be the case that Dilbert is at least partly correct. Modern marketing with all of its complexity does require a bit of guessing, a bit of filling in the gaps. But this is guessing in the sense of hypothesis, wherein marketers use the information available to develop a supposition about how best to communicate.
Focus on what business goals you want to achieve. For most small ecommerce businesses, as an example, the aim may be to generate profit or just to make a sale. Ask what it is that your marketing should accomplish.
Next, ask yourself what needs to happen for you to reach your goal. Do you need new customers? Do you need to sell more to existing customers? And begin to look for ways to actually make those things happen.
Don’t be afraid to make a few guesses. These guesses should fuel your research and eventually lead you to some strategic experiments.