This is how A. G. Lafley, former CEO of Procter & Gamble and Roger Martin and Dean of the Rotman School of Management, defines strategy in the book, Playing To Win. It is a process, a set of choices, a recipe with many ingredients.

So what are the essentials that allows digital strategy to go from high level business thinking to coherent action?

Having spent many years studying and practicing business strategy in the context of digital marketing, we think there are 8 essential ingredients needed to make a high performance digital strategy. Most successful senior marketing managers either directly or indirectly consider these ingredients before deciding if they would be better off with blogs, Twitter or a billboard.

Know Yourself

What exactly are we trying to achieve online? How does that link with our business plan?

Know Your Competition

So if we supply this new product/service, who are the alternatives? Where is the empirical evidence for measuring the level of competition in this space? What’s our competitive advantage over the competition? And sorry, better service doesn’t count as a competitive advantage, good service is expected, easily proclaimed and hard to measure.

Resources

So we want to attract customers from all over the world via an authority position in our marketspace. How much do global PR skills cost? What are we going to write that our peers are going to publish, retweet and share? Shouldn’t we start closer to home first?

Innovation

Innovation differs from invention in that innovation refers to the use of a better and, as a result, novel idea or method, whereas invention refers more directly to the creation of the idea or method itself. What innovation are we bringing to the marketplace?

Current Market Position

It’s essential to plot a market position otherwise we will be unable to tell if our marketing efforts are moving us in the right direction within our defined market. Is our current market position built on advocacy, or buying attention or are we an industry authority? How is that evidenced?

Market Move

Did our industry just get more popular and as a result did we get more popular, or did we outperform our competitors from a digital perspective? How is this evidenced and measured?

Tactics

Do we need a website or a should we just syndicate to websites that already have traffic? Should we use Facebook or LinkedIn?

Usually there is an abundance of insight available on how to use tactics, but unless the preceding seven steps have been followed, we often stumble when asked ‘why’ we use these tactics.

Ultimately however rubber must hit road and this comes in the form of digital tactics. The results of these outputs will then feed right the way back to where we started and qualify our digital strategy.

In my next blog I’ll be talking about the 9 things often considered as strategy but in fact will not help your business achieve its strategic goals.

If you would like to talk about your digital strategy, why not phone Niall or Edward in iON on +442890455911 or drop them a message via their website www.ionology.com.

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The graphic is changed and three days later, the average conversion rate of the website has gone from 3.0 to 3.2%. Is this significant? Nope, statistically speaking this is just noise.

A Bernoulli trial is an experiment that governs the statistical accuracy of a two-tail test. Moving from 3.0% to 3.2% conversion rate because a button changed colour requires that each of the two samples (the old colour versus the new colour) has to have a sample size of 57,697 if we are to be 95% sure our decision to change the button is the correct one.

That means we need to have 115,394 people partake in our experiment before we can say with relative certainty that our button colour change decision is correct. With this website that means the test needs to run in isolation for over a year! Even if we drop the accuracy of the test to 60% certainty (remember chance alone gives us a 50% certainty)we are still talking about a two-month trial. This is impossibly long.

The numbers change drastically depending on the size of the swing, the accuracy we are prepared to accept and the duration or sample size we tolerate.

So should low traffic websites avoid running A/B tests? Absolutely not, but for those with highly trafficked sites which tests you choose to run becomes super important. When we read about how Obama optimized his campaign website attributing to a 49% increase in donations, what we are not told is the sheer volume of traffic the site enjoyed to run its tests effectively.

Changing button colour rarely has the dramatic effect we often read about. Choose your tests wisely. Bigger swings in conversions require less testing than minor changes. There are loads of web calculators to help with the binomial mathematics when preparing your test, just Google “Bernoulli test calculator”.

If you would like to talk about your online channel conflict challenges, why not phone Niall or Edward in iON on +442890455911 or drop them a message via their website www.ionology.com.

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According to Forrester Research and Gartner, despite the rapid growth of online commerce, 66 percent of product manufacturers identified channel conflict as their single biggest issue hindering their online sales efforts.

Veronica is a talented digital marketer but can’t sell her company’s perfume online in anywhere near the quantities the company’s investors would like.  The company uses retailers to sell on the high street who also sell online, but feel that they should be getting 10% or more of their orders directly from the web where margin is 100% greater than going via their channel partners.

Veronica’s company is contractually compelled to sell their product at the Recommended Retail Price (RRP) online, while her retail ‘partners’ can sell it online bundled with other products or with store points or even discounted on occasion.

When the customer looks for Veronica’s perfume she appears high in search engines, but so do her stockists, only they have a better offer and many customers are already pre-registered with them, and some customers want to buy a diverse range of other products at the same time, something Veronica’s company can’t provide.

No amount of cool website design, SEO, tweeting or more optimized checkouts are going to increase the perfume sales. Online availability isn’t the problem.  This biggest mistake Veronica’s management team can make is to expect digital tactics to deliver direct business growth when the real problem that needs to be addressed is one of digital marketing strategy.  And make no mistake; channel conflict is a marketing problem, it’s 100% textbook marketing strategy challenge. 

Veronica is at odds with senior management who perceive the problem to be a supply chain issue and keep her away from the decision-making that could resolve the situation. In fact they don’t perceive the problem to be a marketing issue at all!

In the end the senior managers opt for a fudged outcome.  They choose to keep their online retail presence and sell at RRP, avoid any discord with their retail partners and tell Veronica to spend more on SEO.  In 12 months time, lacklustre online sales will once again be in the spotlight and who is to blame?  Veronica.

There is no doubt that channel conflict isn’t easy to solve.  It requires bravery and strength in leadership.

Here are five possible approaches that can be taken to assist in overcoming the marketing challenge.

1. Stop direct e-commerce plans and instead seek better positioning on partner websites in exchange for your channel support.  The manufacturer’s website then becomes a promotional platform only (doesn’t fulfill investor ambitions)
2. Choose to go head-to-head with your partners and seek to displace them in search and other digital channels (high risk as larger retailers tighten their terms and conditions)
3. Create a new web only version of the product that retailers have no access to. (Typically upsets channel partners)
4. Discount
5. Rebrand product and sell independently (lose momentum and brand leverage).

None of the above five methods of resolving channel conflict come without their deficits and it really depends on the business proposition if you’re able to go direct.

For example Tempur beds sell successfully online and in retail in the USA as well as via third party retailers that sell online and in bricks and mortar stores. Tempur have invested millions in brand building giving them the strength to command terms in the market.

Apple ditched their retailers to go direct, but they had innovation and demand sorted before cannibalizing their retail partners.  Few businesses have such strength.

Out of the five options mentioned the one that tends to work best in my experience is point 1, and that is to ditch direct e-commerce.  It is easier to convince channel partners that have massive website visitor numbers and who have invested heavily in the online retail game to give you more prominence and double sales than it is to double margin going direct.

If you would like to talk about your online channel conflict challenges, why not phone Niall or Edward in iON on +442890455911 or drop them a message via their website www.ionology.com.

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But here’s the rub, Google has always disliked the idea that you could SEO your way to the top of their search engine. They always wanted to reward the searcher with the best quality content results it could find, not the most optimised results it could find.

And now it looks like Google’s dream is becoming a reality. Google has in its last two recent search engine updates, code named Penguin and Panda, displaced those with heavily optimised content in favour of what it deems to be better ‘quality content,’ also known as Content Marketing.

This has upset the traditional SEO apple cart and distressed organisations that once profited from dominance in search engines using scientific methods. The reaction of SEO professionals is that they should now become content creators. And here’s my point. I don’t know too many search scientists capable of creating top quality content. SEO experts can’t become authors, journalists or PR professional just because Google changes the rules.

Quality content is not something to be produced for Google, it’s something you produce for the reader. It’s something that is so valuable that the reader wants to comment on it, engage in a conversation with it and share it. It’s video, prose and photography that are unique and challenging.

To produce the stuff Google wants to place at the top of its natural search engine listings, it seems that you need to have a great grasp of marketing theory, creative writing and use the marketing qualifications gained at university.

Google, marketing theory and traditional university marketing qualifications are now starting to align.

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Visual | Cultural | Financial | Technical

Visual:

Consumer, retail and lifestyle brands tell their stories and brand values using visual metaphors. The design brief given to creative agencies for larger consumer brands often rolls into hundreds of pages. A good brief is essential for good design and good design is essential for selling lifestyle.

The challenge to non-consumer and lifestyle brands is that many marketers focus on making their website as pretty as possible when in fact the visual cues are less important than other project features. Quite often a brief is written on the back of an iPod Nano and competing agencies are told ‘you don’t get our brand’. From the CEO to the placement student, everyone becomes a design curator. The CEO proclaiming that she will know what good design looks like when she sees it. Sound familiar? This is the visual force at work, conspiring to drag your web project below water.

Cultural:

Nothing kills an intranet project like a senior management team who perceive their intranet to be something that the HR department use or as some sort of bureaucratic process management tool. This is a cultural kiss of death for the intranet.
Successful intranet projects tackle the cultural force early. If the top brass of an organisation lean in and use the intranet from its inception, there is a much higher chance that the business will have a vibrant collaboration, innovation platform rather than having a storage space for expenses forms.

Financial:

Jim Morrison, the lead singer of the band The Doors sang: “We want the world and we want it now”. Jim’s lyrics could easily become the web brief for most SMEs. Unfortunately this over-ambitious project brief will leave the web project as dead as Jim himself.

Ambition always exceeds resources in a small business. Take for example a business that wants to export to 10 countries. A website is designed and translated into 5 languages. No problem so far…now all we need to do is run some Pay Per Click advertising to get some attention to the website:

£1000 per month for 10 countries = £10,000 per month = £120,000 per year
Are you sure we want to export all over the world? Let’s just start with France. Better still, Paris.

Technical:

There is a DJ in Northern Ireland called Stephen Nolan. He is a shrill, dramatic character and there is nothing he likes more than to stoke up a frenzy of fear and finger pointing at big companies and central government. He loves to hear about data leaks and then loosely equates the loss of email addresses to potential terrorism and widespread bank fraud.

Who wants to go on that radio show to defend their company policy on data security? No thanks not me, I would rather ensure our data is secure.

Marketers often dismiss the due diligence required by the IT departments in large organisations. It appears to be bureaucratic and the guys in IT appear to be setting up a marketing prevention unit. All you wanted after all was a form-to-email on a website. All Stephen Nolan wants is a single stray strand of public data.

The technical force often causes delay and loss of momentum to web projects if not tackled early. Marketing and IT naturally mix as well as oil and water, but if empathy is shown for IT and they are brought in early, web projects can succeed and the CEO can be kept off the radio.

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Most council websites just dispense information and give priority to what the council feels is important to communicate, not what the citizen came to the website to do. The council wants to talk about Governance and provide minutes of council meetings. The citizen wants to book a spin class at the local recreation centre, renew a dog license online or order a replacement bin.

Councils have lots of websites, tens of them in fact, many of which are competing with each other. This happens because different departments are given silos of funding that all include a requirement to “communicate better with the citizen” and the result is yet another collection of webpages extolling the internal needs of that department.

Run a thought experiment for me: compare if you will, the council website with a public swimming pool. Imagine what would happen if the auditors walked into the swimming pool and found no tiles in the pool, no water, faulty showers and no doors on the changing rooms. Would the auditor sign the project off? Yet flawed council websites costing tens of thousands of pounds/euro are being signed off.

It’s easier for a council to spend time and money on a poor website and gain approval, than any other public facing service. No one is held to account for a council website’s inability to complete citizen tasks or poor use of language, yet lots of table banging and questions would be asked by angry councilors if the same thing happened at the swimming pool.

The challenge for marketers in councils runs deep. The marketers know what needs to be done but implementing dog licensing online requires job displacement offline. Implementing online booking of spin classes means Florence no longer needs to answer the phone in the leisure centre and take names. The solution on the surface may seem simple; the reality is that marketers can do nothing without top management support for cultural change.

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I think we are experiencing a digital marketing bubble with a frenzy of investment in time especially in social media. The reason is because it’s free and we have been mis-sold the conception that more ‘likes’ or followers lead to more sales. However the vast majority of the time it doesn’t.

According to E-Consultancy’s July 2012 Internet Statistics Compendium, global web usage grew by 9% in 2011. Web agencies are popping up like a game of whack-a-mole and it seems every self-employed individual is now a ‘social media strategy consultant’.

Wahoo! It’s like a Wild West gold rush. It’s like the 2007 property rush all over again. Get on your saddle, fire up your laptop and start banging that keyboard. There’s gold in them thar ecommerce hills.

But is the web activity we partake in actually paying off?

I know you just got on your horse on my command, but dismount for a moment. I have somber news. Most Irish business web activity is misplaced and failing. And there is good reason. We are ignoring marketing theory and instead focusing on marketing tactics.

Here are a few examples of where our misplaced desires misalign with marketing theory and fact.

“We are going to create an app that integrates your location with your Facebook presence and tells you about where your local pub is and the special offers in your area and allows you to share them with others”.

That’s a great desire but does the customer really need your app to find a pub or special offers and is it so wonderful that they want to bore their friends with a 10% discount, on social media?

“We have some good news about our latest bid win and we are going to put that on our website”. Is that really what the customer wants to see? Google Analytics tells me it’s not.

“We shall be #1 in Google for Hotel Rooms Belfast” – but here’s the rub, that’s not a term used by customers who book hotel rooms. In fact, people who buy hotel rooms don’t Google by generic terms at all. They research first on third party hotel sites and then Google by brand.

So what’s the common theme here? It’s that most of us are creating digital marketing plans that focus on what we want, not on what the customer wants and we pay no heed to what’s already in the marketplace.

We have been mis-sold that more interaction with more people on the web leads to more sales. In most cases it doesn’twork like that I’m afraid and many of us are wasting time banging keyboards and failing to align our activity with management and marketing strategy.

So what’s the solution? Put down the tools and use traditional marketing theory mixed with digital evidence to create a plan that stands up to scrutiny.
At the heart of any good marketing strategy, we must first recognise that what we want must align with what the customer wants and it must have some level of unique marketplace currency. There must be a clear benefit to the customer and preferably there should be pent up demand.

I predict that the enthusiasm will deflate as businesses start to ask questions around what activity is working and what’s not. Is the investment in digital marketing tactics being driven by true market demand and are our time investments actually producing more business? If the answer is that you don’t know, it’s probably not.

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