How to connect your ambition with your operations
I had an interesting discussion with @nicolasdebray (Semetis, Academic Director) about the Ambition in the Marketing Canvas Process. He made the following comment:
Having a high-level financial objective is definitely important but often people in the field have difficulties to link this high-level objective (generate a revenue growth of 5% thus 1M€ more) with what they could do!
There are multiple ways to potentially connect this ambition with your operations: (1) either you attract more users, (2) either you retain more users; they stay longer, (3) either they buy more often (ARPU) or (4) they buy more products and/or services. This is connected with the notion of Customer Lifetime Value (CLV).
The discussion you should have in the Marketing Canvas will help you to make this connection. How? By understanding which driver(s) could help you.
Q1 - Is your MARKET helping you to achieve your ambition?
For answering this question, we can refer to the product-lifecycle approach using the 4 stages definition of a market:
Market Development or Introduction: Personas are not yet used to buy this kind of product or service. They need a lot of explanations and trust is not installed on the market, yet the volume of potential buyers is huge as the market hasn’t been addressed. It is clearly an Accelerator because the market orientation is positive (growth of sales but not in terms of profit).
Growth: Personas are getting used to buy this kind of products/services. They now understand the benefits of the products/services and trust providers. There is still a huge volume of buyers available on the market and traction is high. It is definitely an Accelerator because the market orientation is positive (growth of sales and profit).
Maturity: This often means that your market will be saturated and you may find that you need to change your marketing tactics to prolong the life cycle of your product. It is a Brake as most of the market has already bought a solution to their problem. Sales are flat.
Decline: During the end stages of your product, you will see declining sales and profits. This can be fuelled by changes in consumer preferences, technological advances and alternatives on the market. It is a Brake as the market is declining.
Q2 - Is your Customer Acquisition helping you to achieve your ambition?
For answering this question, you can use 2 important concepts: Customer Acquisition Rate (CAR) and Cost of Customer Acquisition (COCA).
If Customer Acquisition Rate is below market average, then it is a Brake because it takes more time to get new customers than your competitors;
If Customer Acquisition Rate is above market average, then it is an Accelerator because you attract faster new customers than your competitors.
If COCA is above market average it is a Brake.
If COCA is below market average it is an Accelerator.
CAR has the priority on COCA and therefore the final status for User is defined by CAR; COCA is telling how effective you are.
Q3 - Is your users’ ARPU helping you to achieve your ambition?
For answering this question, you need to understand if you have an optimisation strategy in place for your ARPU:
If your ARPU is below market average, it means that you are either attracting low value customers and/or not fully stimulating existing customers. It is therefore a Brake.
If your ARPU is above market average, it means that you are either attracting high value customers and/or fully stimulating existing customers (recurrent revenue, up sell, cross sell). It is therefore an Accelerator.
Q4 - Is your users’ Lifetime helping you to achieve your ambition?
For answering this questionnaires, you need to understanding of you have a retention strategy in Place for your users:
If the lifetime is below market average, it means that you are not capable to keep your existing users as long as your competitors. It is a Brake.
If the lifetime is above market average, it means that you are capable to keep your existing users longer than your competitors. It is an Accelerator.
A second concept worth looking is the Cost of Customer Retention:
If COCR is above market average it is a Brake.
If COCR is below market average it is an Accelerator.
Conclusion
At the end of the exercise, you will have a better view on how you will achieve your ambition. It will also help your team in charge of the operation to understand what they have to do:
And/Or Getting more clients on board
And/Or Developing and/or selling more products to their existing client base
And/Or Keeping their clients longer (satisfaction, retention)
Definition
Customer Acquisition Rate (CAR)=Number of customer acquired/Length of time period.
Cost of Customer Acquisition (COCA)=All the costs spent on acquiring more customers (marketing expenses) by the number of customers acquired in the period the money was spent.