Is Digital Marketing the 24/7 Salesperson Your Business Needs?
Imagine walking into a room full of your ideal customers, all eager to learn about your business. Now imagine being able to do that 24 hours a day, 7 days a week, without ever leaving your office. That’s the power of digital marketing in today’s smartphone-dominated world. But is it really worth the investment for your business? Let’s dive in and find out.
What is Digital Marketing, and Why is it So Popular?
Digital marketing can put your business in front of your prospective buyers by targeting their interests and preferences in specific locations. Our approach is to use Google search, social media, email marketing, all connected to a website to achieve this. You basically sign post the digital pathways (touch points) people use to find a product or service like yours.
It’s about creating content that guides people through their buying journey and encourages online and offline connections and sales.
There is one big reason digital marketing is so popular—smart phones. Digital marketing was popular before smart phones came along, but it was nowhere near the market penetration it is now; with 90% of Australians owning a smart phone connected to the Internet. The invention of the smartphone is a small business owner’s dream come true, because you can now get your business in front of many prospects and customers alike, regularly for a very reasonable cost.
The Benefits of Digital Marketing
- Your customer gets the pre-sale or service/product info they
need—immediately. - Your customer can make the enquiry or booking—immediately, any time of day or night.
- Your customer can order what they need—immediately.
- You can get in front of your target audience—immediately.
- You can explain how your services/products work, in detail.
- You can communicate with your target audience regularly in some very interesting ways.
- This isn’t something that’s only in your expense column. Your digital assets should give you a direct return on your investment and help you grow your bottom line.
Digital Assets Are Your Online Growth Engines
I call these digital properties assets because, just like an asset, you spend time and money on each of these things before you get a return. Sure, you could choose not to invest in these assets, but then you won’t benefit from the many opportunities they deliver. It’s your choice, but as a business owner, I would imagine growth is just as important to you as it is to me, and these assets can definitely help your business grow.
Usually, when a business isn’t growing; it’s shrinking. As you know, there is no standing still in business. For this reason, I lean towards the growth side of the equation and I have experienced significant growth from these assets.
Expect a Return on Your Investment
Investing in digital marketing should give you a pay-off. Investing being the operative word, and like all investments, the name of the game is getting a return on your investment (ROI). That’s the good thing about digital marketing; you’re doing this to make money and you should expect to. But like all investments, start small, have patience, gain an understanding, develop a strategy, and allocate some time and money to developing your assets.
One crucial metric to consider when evaluating your digital marketing ROI is Customer Lifetime Value (CLV). CLV represents the total amount of revenue a business can expect from a single customer over their entire relationship. It’s calculated by multiplying the average purchase value by the average purchase frequency and the customer lifespan (CLV = Average Purchase Value x Average Purchase Frequency x Customer Lifespan).
Understanding CLV is vital because it shifts your focus from short-term gains to long-term customer relationships. In digital marketing, acquiring a new customer is often more expensive than retaining an existing one. By measuring and optimizing for CLV, you can make more informed decisions about your marketing spend, customer acquisition costs, and retention strategies. For example, you might find that investing in email marketing to nurture existing customers yields a higher ROI than constantly chasing new leads through paid advertising. This long-term perspective can lead to more sustainable growth and profitability for your business.
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Keeping it Real: Setting Realistic Expectations
You also need to keep it real. Investments are usually proportional. Investing $300 and expecting $3000 (900%) return in a short period is not impossible, especially with email newsletter marketing, but it’s not typical in the digital marketing world; not when you’re just starting out. But as we all know, in business, you don’t make money unless you spend it first. It’s the same old story, no matter what you invest in. Do your research, decide how much to invest in your situation, measure your investment based on educated, realistic expectations and goals.
How Much Should You Invest in Digital Marketing?
I guess the simple answer is, whatever you are comfortable with and can afford.
The other answer is; not nothing. Completely Ignoring digital marketing only allows digital marketing savvy competition to take your customers—unchallenged, and you probably won’t even notice it, until you see your competition everywhere in your market and then notice—you’re not everywhere. That’s not an exaggeration. I’ve seen it happen many times and experienced it myself. It’s not much fun playing catch up. It’s better to get out in front of your competitors and stay there. Let them play catch up.
If you have more money than time on your hands, you could outsource this to a business like ours. If you have more time than money on your hands, you can do your research and training to do some of this yourself. There’s plenty of info on YouTube to help you. Although, be prepared to spend months, not days or weeks, to get a handle on it all. You will get a head start by reading posts like this one, on our Marketing Insights Blog.
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JoinSome benchmarks on how much to invest ongoing
Here is some interesting research on the subject on how much businesses invest in digital marketing.The reason digital marketing is so successful for some is they pay attention to the data. Not in a granular way, but looking for trends, both good and bad, and any opportunities the data presents. You may find a search term that you didn’t wilfully target has become popular. Noticing this in your data allows you to further optimise the page or post and work out a way to increase conversions from that listing.
Small businesses typically allocate between 7% to 12% of their total revenue to marketing efforts3. However, for digital marketing specifically, the range can be more focused:B2B companies generally spend between 2-5% of their revenue on marketing4.
B2C companies tend to invest slightly more, with 5-10% of revenue going towards marketing4. For a small, local business, aiming for the lower end of these ranges is often a good starting point, especially if you’re just beginning to invest in digital marketing.
Several factors can influence how much a small, local business should invest in digital marketing:
- Industry: Different industries have varying marketing needs and competitive landscapes. For example, consumer packaged goods companies spend an average of 25.19% of revenue on marketing, while manufacturing companies spend only 3.75%4.
- Growth Stage: Businesses in early growth stages may need to invest more heavily in marketing to establish their presence.
- Competition: If you’re in a highly competitive market, you may need to increase your marketing budget to stand out.
- Business Goals: Your specific objectives, such as increasing brand awareness or driving local foot traffic, will impact your budget allocation.
When allocating your digital marketing budget, consider focusing on these key areas:
- Online Advertising: Small businesses spend an average of $400 per month on online advertising1.
- Social Media: 44% of small businesses use social media to promote their products and services1.
- SEO: 68% of small businesses focus on SEO to drive website traffic1.
- Email Marketing: 68% of small businesses have integrated email marketing into their overall strategy1.
To make the most of your digital marketing budget:
- Understand Your Audience: Tailor your strategies to your target customers’ preferences and behaviours.
- Focus on High-ROI Channels: Email marketing, for example, has an average ROI of 4200% for small businesses1.
- Measure and Adjust: Regularly assess your marketing performance and adjust your strategies accordingly.
- Start Small and Scale: Begin with a conservative budget and increase it as you see positive results.
Remember, while these guidelines provide a starting point, the ideal marketing budget for your small, local business will depend on your specific circumstances and goals. It’s essential to regularly review and adjust your marketing spend based on the results you’re achieving.
View all the references used in the above benchmarks here: What percentage of sales should a small, local business invest in digital marketing?
Being Led by the Data: Measuring Your Success
I won’t get into the weeds in this post about the different analytics packages you can use. I’ll be publishing another post getting into those details shortly. What I wanted to point out is viewing your data on your website, advertising campaigns, social media channels gives you insights into how your digital marketing is going?
What you don’t measure, you can’t manage.
Just like you need to check your financial data, you need to check your digital marketing data. To do this with a WordPress website can be simple enough. I’ve added this analytics plugin to all my WordPress sites, Independent Analytics, which for free provides you with a fair amount of info. If you want more detailed analytics; Google Analytics is the industry standard package to add to your website, although it’s more complicated to set up and use.
You can also check the insights in any social media platform you are using. Look for Insights, or a dashboard. You can install the Meta App to check your insights on Facebook and Instagram and do lots of other things. As I mentioned, each of the social media platforms has their own way of checking analytics and I encourage you to view them regularly.
Is Digital Marketing Worth the Investment?
In today’s digital-first world, the question isn’t whether you should invest in digital marketing, but how much and how soon? With smartphones in nearly every Australian’s pocket, your business has unprecedented access to potential customers. By strategically investing in digital assets like your website, social media presence, and targeted advertising, you can:
- Reach your ideal customers where they spend their time
- Provide immediate information and service
- Measure and optimise your efforts for maximum ROI
While the investment required varies based on your business size and goals, one thing is clear: ignoring digital marketing means leaving opportunities (and customers) on the table for your competitors.
Ready to take the next step in your digital marketing journey? Subscribe to our newsletter for insider tips, tool recommendations, and strategies to help you make the most of your digital marketing investment.
And if you’re looking for personalised guidance, don’t hesitate to reach out to us at Customer Path. We’re here to help you navigate the digital landscape and grow your business online.
