When you start working on your Marketing Strategy, I recommend that you first discuss the REVENUES. Why? At the end of your exercise, your actions and recommendations aim to support and justify your budget. In simple word, the business world cares about the numbers and the role of the strategy is to give enough confidence that the organisation will deliver it. Thus let's start this exercise from the REVENUES.
When you build a strategy, it would be a big mistake to work only for tomorrow. You have to prepare your futur. Think ahead. Long term like 10 years and ask yourself what your business could look like. Start from there and identify also the revenues risk (e.g. robots will replace functional workers and we have a business of job placement, what does it mean?).
Your revenues are also influenced by the Total Experience you give to your customers/clients. By Total Experience, I mean Customer Interactions, Conversations you have with them, the Purpose of your Brand. The more your Total Experience is strong, the most revenues you can generate (if you monetise it properly)
In the MARKETING CANVAS (if you don't know the Marketing Canvas, just click here), we have 4 main elements driving REVENUES:
- USERS: How much people/person are effectively paying for your products and services? you might have 1,000 persons or 100,000. It is quite different. Not all companies are capable to answer this question!! Example: some brands in the retail have no clue who purchase their products because they have no relationship with them.
- ARPU: ARPU means Average Revenue Per User. The idea behind this acronym is to identify how on average your paid users/customers are spending with you (on a monthly or yearly basis). Example: they all pay a subscription to the gym (20€ per month) and they all drink on average 5 energetic drinks a month @ 1€), so the ARPU is 20€+10€=30€. If only 50% of the paid users are drinking 5 energetic drinks and the other 50% are not, then the ARPU is 50% of 20€ + 50% of 30€= 25€ (getting more complex, hope you are following ;-)
- LIFETIME: Imagine you lose all your paid users after 1 year (they don't buy anymore), then their lifetime is 1 year. If you lose 50% of your customers each year, their lifetime is 2 years. The lifetime is critical because it defines your recurrent revenues (sometimes called cash cow or matelas business). Not all customers are equal). If you lose high value customers (big spenders) faster then low value, you lose more money.
- GROWTH: It gives you an idea about how the Market is growing. It is the external factor. It is easier to work in growing category than in a declining. Therefore you should deeply understand where you play and prepare yourself to enter new growing categories when you feel that the ones where you are currently playing are declining soon.
When you review these elements, the question you should have is:
List of questions for assessing your revenues situation using the Customer Lifetime Value
- Do you know if you are in a growing category?
- Do you know how to increase your market share in your category?
- Do you know what are your top 3 revenue drivers tomorrow?
- Do you know what are your top 3 promising revenue drivers in the next 10 years?
- Do you know how to prepare new revenue drivers for your category?
- Do you know if you should find a new category for the future?
- Are you capable to calculate your revenues per customers/users instead of products ? How much users/customers do you have ?
- Do you know how to convert visitors into free users?
- Do you know how to convert more free users to paid users?
- Do you know how to accelerate your customer acquisition (traction, velocity) ?
- Do you know these numbers by customer based percentile ?
ARPU (Average Revenue Per User)
- Do you know the ARPU of your business activity?
- Do you know the contribution of each value proposition in this ARPU?
- Do you know how to increase the number of paid transactions made by your users on a yearly and monthly basis? More cross-sell? More up-sell?
- Do you know how to protect/increase the average paid price for each transaction ? more premium products? less promotions/discounts ?
- Do you know what is the average lifetime of your users? per percentile?
- Do you know how you can secure & extend the lifetime of your TOP 1% users ?
- Do you know the churn level of your users? per percentile ?
- Do you know what are the drivers of the churn? are you capable to act on them for reducing your churn?