Hello, small business owner! Whether out of necessity or desire, you are a do-it-yourselfer. What’s not to love about people who have a desire to make things happen and are engaged enough—be it out of necessity or unadulterated passion—to jump into the mix? I’m talking about people who are ambitious enough to buy a manual on auto repair so that they can work on a transmission in their garage or those who love taking photos and decide to create their own website to showcase their gems. There’s something to be said for just doing it.
Now let’s talk about DIY in Internet marketing terms. As a small business owner, you are the soul of your enterprise. You know your business and your vertical better than anyone else. When it comes to the business of eCommerce & Internet marketing for small business, you may be faced with a situation where you are:
1) Not the expert
2) Short on time
3) Limited by budget
So what can a small business owner like you do?
Here are three typical approaches small business owners take:
1. The best of everything approach
Small business owners scour the Internet, bookmarking and saving advice from trusted sources. Armed with guides, how-to articles, and cheat sheets, they’ll come up with their own game plan based on what they perceive to be the best advice or a combination of existing thoughts on the matter. The great thing about this strategy is that there is a lot of quality advice and information online. FOR FREE. As an example, here is Shopify’s latest guide to boost your sales.
The problem with this approach is that you will conclude everything is important! This will lead to the classic case of doing a little bit of everything but not doing anything really well. When held within context, many of the ideas will be really good for your business. Case in point, here are some key takeaways from a recent survey by ExactTarget.
Of the marketers surveyed,
a) 58 percent plan to increase their budget for email marketing
b) 54 percent plan to increase their budget for SEM/SEO
c) 55 percent plan to increase their budget for Social Advertising
What isn’t said here is why 58 percent plan to increase their email marketing budget. Was it because they didn’t spend on it last year? And is the same set of responders also going to increase their SEO budget? There is plenty of great information on the Internet but much of it is not in context. So be careful.
2. The glory days approach
Small business owners look back at the best year they have had in business and try to re-create that scenario. For example, if they had a fantastic run in SEO in 2010, they set their sights on achieving the same glory and assume that once they accomplish this, they will get back to the same levels of profitability as 2010. The problem with this approach is that there are dozens of variables at play, and the one variable they focused on may have been an obvious lever but not the most important. The fact is that it is impossible to re-create the same conditions that brought past glory without inventing a time machine. Don’t pine for the days gone by.
3. The autopilot approach
Internet technologies and marketing channels change rapidly. What worked last year may not even be possible this year. For example, Google’s product listing ads used to be free for a long time. Lots of enterprising business owners took advantage of this and drove high quality traffic back to their sites for free! In late 2012, those who assumed Google would continue to keep PLA free and bet a site’s performance on it paid dearly for that assumption. Google made PLA a paid service in mid-2012, and the same small businesses that profited from it before had to factor in costs that they never had to pay before, making buying traffic again a margin’s game. So check your assumptions before committing to a plan.
So here’s the bottom line. You, a small business owner and the wearer of dozens of hats, get unsolicited expert advice every day. And you don’t have a team of marketing experts who can sift through this advice and tell you what’s going to work. The constant barrage of information can be distracting and daunting if you don’t know how to handle it.
So here’s an idea – Contextualize everything you do. Build a frame of reference to evaluate every idea and sales pitch you hear. Here are the three steps to building context:
Step 1: Know your site’s metrics
Use web analytics and financial reporting to get a great handle on your site’s performance. Know answers to questions such as (but definitely not limited to)
- What is the profitability of my marketing channels?
- What is my site’s overall conversion rate and the conversion rate for my marketing channels?
- What are the areas of “friction” that cause visitors to leave the site?
- What are my customers’ demographics?
- What is my site’s retention rate?
- What is my competition doing better than I am?
The idea is not to know the answers to every single question imaginable, but it is to get a handle on what is happening on your site and in your vertical. This will help you make informed and logical decisions to avoid knee-jerk reactions.
Step 2: Know your three levers
You have three levers at your disposal to improve your online business – traffic, site experience, and margin. Everything you do for your website can be neatly compartmentalized into one of these three levers. But before we go into detail about each lever, here is a simple formula to frame your thoughts:
Traffic x Site Experience x Margin = Money Earned
This is a highly simplified formula to measure internet success, but it is the fundamental formula from which other more sophisticated approaches evolve. Here is how and why the inputs to this formula can be influenced.
Traffic – More qualified traffic to the site means more money earned. The key here is that the traffic should be qualified. For example, a dozen visits from Twitter may not be as useful to you as five visits from Google search.
Site Experience – A better site experience means more user engagement. And more user engagement will lead to higher conversion on the site. And higher conversion means more money for you. A better site experience could include improving your mobile interface, improving calls to action on your key funnel pages, or increasing the depth of content on your site. Site experience improvements can be attained in any number of ways.
Margin – For some businesses, it is possible to adjust the margin by providing discount coupons. If done right, the volume of sales and cross-sells into other products or services will make up for the lost profit.
Now that you have a feel for the three levers to move, based on what you know about your site’s metrics, answer these questions.
- If I increase my site’s traffic by X, how much more revenue can I expect?
- For every basis point improvement in my site’s conversion rate, how much more revenue/income can I expect?
- If I sacrifice margins for certain segments of products, how much more gross/net profit can I expect as a result of higher conversion or higher traffic?
You should have an answer that goes like this – for every X change, I can expect Y in revenue/profits.
Now we’re getting somewhere!
Step 3: Apply the framework
Now look at those awesome ideas that you get flooded with every day and ask yourself
Does the cool new idea from my favorite Internet guru improve traffic or improve experience or affect margin?
How much change can it drive to my bottom line?
Is it more important than what I am already working on?
Do this every day for every blog post you read, every webinar you attend, every unsolicited email you get, and every sales call you answer. You will be surprised at how quickly you can master this skill, filter out the noise, and really hone in on the gems of advice to follow.
If you are thinking “Great advice, but I really don’t have time to do all that,” then stop right there! Other than making sure your site is up and running, building context around all your website’s improvement initiatives and getting a strong feel for what will move the needle are the two most important things you could do.
The crux of the matter really is becoming more efficient, more focused, and knowing what is important. And making a habit of it.
To recap:
- Know your site’s performance
- Know the three levers and their impacts
- Apply the framework to assess every new idea
- Make it a habit!
Once you have done the first three steps, come back to read about how to make the process a habit. Take it from a small new business. Establishing a regimen and living by it is the hardest thing to do when there are 100 priorities. We’ll share our best practices on how we do it in a later post. However, right now, there’s work to be contextualized!
Thank you, Christin, for partnering with me to write this post.
This post drove a lot of discussion internally, and we hope it was just as thought provoking for you.
