Short- and longer-term planning have become commonplace for large corporations. But for the busy sole proprietor or the manager of a profit center in a large corporation proficient in performance marketing methodologies, planning can seem to be a time-consuming hassle producing questionable results.

But that is hardly the case. Building the performance marketing operation (e.g. an ecommerce store as well as an elearning platform or a SaaS solution selling directly etc.) must start with a plan and end with a plan.

Let’s take a look at some of the key elements involved in mapping out an effective growth strategy for performance marketing companies.

Short- and Long-Term Planning

Short-term planning should cover your activities for the upcoming 24 months. With many companies, the first 12-month period of the planning cycle becomes the budget for the fiscal year. The 24-month plan identifies short-term strategies, short-term tactics and helps to determine short-term staffing, financing, etc., for the performance marketing operation.

The long-term plan covers years three, four and five. The longer-term plan is an extension of the short-term plan and assumes that the business is carrying out its objectives.

A crucial ingredient in planning is ensuring that both short- and long-term plans are totally compatible with overall corporate objectives and strategies. This tends to be a problem area with smaller divisions of larger companies and even sole proprietorships.

The Major Elements of Planning

There is no one correct format for long-range planning, but see the suggested outline below for an ecommerce site.

1. What is the mission of the online store?
2. How is the online store positioned?
3. What is the scope of the online store; i.e., what is the primary target market and the secondary target market?
4. What is the nature of the competition of the online store at present and what is projected in the near future?
5. What is happening in the environment that might affect the online store?
   • What are the long-term prospects for online stores in this product area?
   • To what degree is the online store going to be affected by economic swings?
   • Are new technologies emerging that will change the online store’s and its products’ competitive nature?
6. What are the major strategies during the coming five-year period? These should be very general and should include both short- and long-term strategies.
7. What plans are necessary to carry out the above strategies? These plans should be specific, shorter-term and detailed.
8. Does research support new market development?
9. What plans are underway to seek new performance marketing opportunities (new markets, new product lines, new customer sources)?
10. What are the financial assumptions for the five-year period?
    • Economic climate
    • Inflation
    • Fixed costs
    • Salary and benefit increases, etc.
11. What is the five-year profit and loss summary?

Now let’s see how these planning elements apply in two divergent expansion options with vastly different performance marketing and merchandising strategies. These strategic options are:

• Progressively building the online store in sales and in the number of buyers at the expense of short-term profitability.
• Placing primary emphasis on the online store’s profitability and allowing the site to expand at a slower rate.

The major underlying assumption made in presenting these options is that the ecommerce site will maintain its quality of merchandise, fulfillment and service to the customer.

Strategic Option #1: Aggressive Sales and Buyer Database Growth

Here the corporate objective is to expand sales and buyer levels, giving secondary importance to profitability. The following steps may be taken.

Expand Each Campaign’s Traffic Volume

Depending on the target market, traffic volume can be expanded through:

1. Increasing the number of clicks each campaign receives. This can be achieved through testing of new outside mailing lists, trying new audience segments through Facebook ads, and testing traffic sources that have not been used as often in the past.
2. Developing a major lead generation program. This means creating a display campaign to generate email leads (including web push notification permissions, retargeting pixels etc.) for a special ‘secret’ offer or a free voucher offer. Package inserts, placed in other ecom’s parcels, are another method of developing inquiry names. This is becoming an effective method for reaching “hot” buyers of competitors or near competitors that will allow promotions to ride in their box shipments. Social media efforts, local radio ads, and print newspaper ads – there are a multitude of methods for generating leads that are new, innovative and worth exploring in places that are not overcrowded with other offers. Such a program will take a rigorous tracking effort to identify inquiries, to follow through to convert them to first-time buyers, and then to convert single-buyers to multi-buyers.
3. Follow-up your campaign with additional mailings, retargeting efforts, SMS texts, robocalls or live agent calls directed to your users. Marketers find that they can – profitably – contact their own multi-buyers and most recent buyers a second, third or fourth time (contact cost-wise as well as alternative profit-wise). What’s more, there are segments they can contact profitably a fifth time to generate additional sales. It is possible to increase traffic volume by contacting the better present buyers. Segmentation of the buyers’ database is a must if you want to carry out this step.

Expand the Number of Differentiated Campaigns

Another method of increasing overall ecommerce traffic volume is to expand the number of campaigns executed. For instance, if your company currently is producing two new acquisition campaigns on Facebook ads monthly (e.g., a long form landing page with a special dollars-off offer for an exclusive bundle of products only your site has right to sell), it might be possible to expand profitably to three campaigns.

The nature of the campaign’s offer and merchandise mix will determine seasonality of the product line and whether or not it is possible to expand the number of campaigns the company can successfully invest in. It is important to test campaign expansion and not automatically assume the production of additional campaigns will produce the type of desired sales and profit results.

Other Promotional Efforts

Another way of expanding traffic volume is to look at other specialized performance marketing efforts. It might be possible to add a selective solo offer – i.e., a targeted single-product, long-copy promotion – or to develop a specialty microsite.

Many companies find that changing the promotion mix offered to a customer from a standard ecommerce offer with hundreds of products to choose from to solo offers to multi offers (a multiple product offering with individual promotion long copy landing pages) is an effective way to add promotional events and change “your look” to customers.

Concentrate on Existing Buyers

One method of expansion many ecommerce marketers ignore is increasing activity and contacting your existing customers.

The old 80/20 rule is relevant here. Marketers often go to great lengths to develop new offers and test new traffic sources, when they should be concentrating their efforts on their own customer database. Typically, the present customer will produce the maximum amount of sales and profits for the dollars spent – the 80% of the business.

How can penetration of existing customers be increased? Segmentation is vital, no matter your online store’s size. It is important to keep detailed information on the buyer list. You must know:

• What a customer has purchased from the online store, i.e., individual products and product categories.
• How often and how recently the customers have purchased.
• The method customers have used to buy, i.e., credit card, cash on delivery, installments, bill-me-later etc.
• The total dollars customers have spent.
• Which customers have returned or cancelled orders. (These customers are less likely to respond to future promotions.)
• Where the best customers – the multiple buyers – live,
• If the best customers have any unique demographic characteristics that could be usable in identifying new customers.

Improve Customer Response

Assume for a minute that your ecommerce site has 1 million buyers in its customer database. Let’s imagine normally you get a 1% response, or 10,000 orders, if you send your email promotions to it. If response could be increased to 1.25%, there would be 2,500 additional orders.

How can customer response be improved? There are several methods.

Photos, graphic design and copy can always be improved. From time to time it is important to have someone outside the organization take a good look at these elements to determine how they can be enhanced. While consistency from one campaign to another is important, it is also vital to reevaluate periodically where your online store is going and how it can convey excitement, verve and a sense of newness in every campaign.

Another way to improve customer response is adding (after testing) response stimulators. Premium, sweepstakes, discounts, gift certificates, quizzes and games, personalization, SMS text vouchers, or special phone incentives are just a few of the methods that should be evaluated and tested as a means of improving customer response.

Note: Do not overlook action devices because you think your site is too upscale for such vehicles. Any good action device can be executed in an appropriately upscale style.

Probably the most important method of upgrading customer response is improving the merchandise. Detailed post analysis of merchandise by product, product category and, most important, by the amount of clicks devoted to promoting the product (earnings per click / email / SMS text etc. analyses – see the link below) is essential in building on winning products and product categories.

The Guide to Choosing and Merchandising Products That Sell [Ecommerce Series]

Knowing How to Expand

How do you know where and how to expand? The best method is to let detailed post-analysis of the campaign(s) determine and lead the way. Careful back-end evaluation will determine which product categories are strongest. Such evaluations will identify high-potential products that might be useful as solo or in multi-offers.

The analysis of the outside traffic sources and the stronger segments of the buyer database also may determine where specialized types of promotions can be added.

Strategic Option #2: Emphasis on Profitability

In this case, the corporate objective is to build the business more slowly with a total emphasis on profitability. The following discussion covers some of the steps that you should take if this is the corporate marching order.

Evaluate Costs Against a Standard Model

This activity will help determine if a major profit and loss area, such as cost of goods, promotion, advertising, fulfillment or overhead, is materially out of line and needs significant readjustment. This activity can also help determine your ecom’s rate of growth and help build a better growth plan.

Concentrate Promotion and Traffic

Rather than aggressively testing outside traffic sources, new audience segments and new concepts, this bottom-line-oriented objective stipulates that you attempt to concentrate your traffic volume on these sources and outside lists and products that have produced the best results in the past.

A stronger orientation should be to your own customer database, which can be expected to produce a significantly greater response than outside traffic sources. Lead generation programs must be carefully evaluated and limited unless they are producing profitable results.

Limit New Testing

As much as performance marketers love to test new concepts, new traffic sources and new promo formats, you must guard against “frivolous” testing.

New Customers vs Seasonality

Rather than expanding to new promotional campaigns geared towards getting new customers in your database and new off-season testing, a more concentrated effort in the best season will produce better profit results. If your site concentrates on gifts, it will produce its best results during the Christmas/holiday season.

Off-seasons will produce less response and be less profitable. It is important to evaluate carefully non-prime-season customer acquisition campaigns. Some efforts, such as SMS texts, phone follow-ups, or direct mailings as well as time/money consuming dedicated landing pages may have to be eliminated if they are not producing profitable results. It is important to constantly examine creative costs and traffic costs. You have to give careful attention campaign break-evens for each season.

Re-examine Competitive Position and Market Niche

This is a perfect time to re-examine your online store’s competitive position and determine whether it is still as strong as when it was launched. Has the ecommerce site’s identity or market niche eroded? Has new competition emerged that is making inroads into the market? Has customer response been maintained or improved?

Carefully Examine Your Ecommerce Business

Whether your business’ objective is to expand aggressively or cautiously, it is important to audit the operation periodically to determine if the business has the strength to expand. Outside experts -professional performance marketers or specialized consultant – are very helpful in providing an unbiased evaluation of strengths, weaknesses and growth potential.

You should examine the following operations:

• Merchandising. Many performance marketers feel that merchandising is the “backbone” of an ecommerce operation. Merchandising must be effectively controlled in terms of gross margin, returns, cancellations, inventory management, and disposal of inventory. The staffing of a merchandise operation is vital to the health of the business.
• Fulfillment. Order processing systems, customer service, warehousing, picking and packing, telemarketing and credit card, check or cash on delivery handling are all essential to the fulfillment operation. Careful attention must be given to how long it takes to ship orders.
• Marketing (promotion, advertising and creative). Is your online store producing the expected results? How about customer response and average order? Careful examination of the promotional efficiency of campaigns in terms of, for instance, revenue per one promotional email sent is important. One of the most important areas in marketing is customer database management. Is the database management and traffic buying under control?
• Overhead. Is your store running as lean as it should be? Is overhead in line with that of other growing sites?

Summary

• Expansion of an ecommerce operation is simple! All that is needed is: a plan that is compatible with its corporate direction and constant examination of efficiency and effectiveness in each major area – merchandising, fulfillment, marketing and administration.
• Your ecommerce expansion can be aggressive and sales-oriented, or it can be bottom-line-oriented. It all depends on the plan and the goals of your company.