Businesses are facing greater complexity than ever before in engaging consumers, tracking their journey from start to finish, and protecting user privacy.
To assess the entire consumer journey and decide which campaigns maximize profitability, you must first clearly define your business objectives so that your measurement strategy is aligned with those goals.
In this module, you will learn:
1. Regarding the four sorts of business objectives
2. How to implement them in your business.
3. How to establish realistic growth targets
Clear objectives are important.
To reach your business goals, well-stated objectives can help you determine which techniques are effective in growing your firm and which can be improved.
The key to creating a great objective is to make it measurable and have a clear timeline. Once you’ve determined your company’s overarching, top-level goal, you’ll:
- Determine your financial and strategic business objectives.
- Translate your financial and strategic business goals into marketing objectives.
- Translate your marketing objectives into advertising campaign objectives.
This can help you measure what’s most important to your business. Let’s examine each one.
- Financial objective: A financial objective focuses on increasing revenue, profit margin, or volume (for example, units sold). Often, larger companies will create a subgoal for each of their lines of business.
- Strategic objective: Strategic objectives outline how you’ll achieve your financial objectives.
- Marketing objective: Marketing objectives support the business objective. Some smaller companies may not have the scale to warrant this level of specificity.
- Advertising campaign objective: This refers to the channel-specific goals needed to meet your marketing objectives.
a. Campaign metrics: These are specific indicators used to assess the effectiveness of your media objectives.
Apply to your business:
2. Your product or service.
3. Your consumers.
4. The results or value you provide to your customer
What are the most appropriate short-term and long-term goals for your company? How will you answer these questions?
- How does your company make money?
- Where are the most likely sources of growth?
- Which competitors are doing well in the market, and why?
- Where do you see your business in five years?
Financial objectives: How to make more money:
To make your business prosper, you need to be able to increase your profits. There are only two ways to do this: reduce costs or increase revenue. If you want to increase your revenue, you can either raise your price or increase your volume. Depending on the type of business, volume can mean units sold, capacity, leads, or something else.
You need to balance your short-term and long-term goals, and each short-term decision also needs to work toward achieving the long-term goal.
Let’s look at how each outcome is affected by the other decisions.
1. Profit and revenue:
Increase profits.
- Increase financial profit; the difference between the amount earned and the amount spent to buy, run, or make something.
- Reduce your expenses or increase your revenue.
Increase revenue.
- Increase company income (money coming in).
- Either raise your price or increase volume.
2. Volume and demand:
Increase volume
- Increase units sold, capacity, leads, or something relevant to your business
Increase demand
- Increase consumers’ readiness to pay a price for a product
3. Price:
Lower price
Lower the amount paid by the consumer to purchase products
Increase price
Increase the amount paid by the consumer to purchase products
Apply to your business:
- Improve margin or profit: This is great for businesses that are trying to save expenses and increase sales. However, there is usually a cost involved. For example, even though a company will be very profitable in the long run, some cost-cutting investments may not pay off for a few years, causing it to lose money in the short term. This is usually preferred by well-established businesses or those with low profit margins, such as retail businesses.
- Increase revenue: Businesses usually do this by raising prices or increasing the total number of sales at the same price. In other words, revenue can increase even in the absence of an increase in total sales.
- Increasing volume: Businesses looking to increase volume will either adopt different strategies to generate more demand or lower prices to increase sales. But doing so may reduce short-term profits.
Strategic objectives:
Many businesses use strategic objectives in addition to financial objectives to explain how they plan to meet their financial goals. Developing your brand strength is an example of a strategic goal.
- What does “brand” mean to me? In the eyes of some people, the logo is the brand. However, in this instance, we are referring to consumer perceptions of your brand and merchandise. You are that brand.
- In the marketing world, the term “brand strength,” also sometimes known as “brand equity,” refers to the advantage of owning a well-known name such as Sony. The theory behind it is that a well-known brand name can increase sales simply by virtue of being recognized.
It’s difficult to get new users if people don’t know about your brand or don’t think well of it. As a result it is also difficult to retain existing consumers. As a result, branding is vital to a business’s long-term ability to increase sales.
What’s a reasonable growth target?
Setting growth targets depends predominantly on your maturity in the market you compete in. Let’s explore this more.
Mature companies: If you’re a mature company, growth is likely to be modest, as you have less room for growth. This isn’t necessarily bad. Low single-digit growth for a large brand may translate into more dollars than double-digit growth for a smaller brand.
Less-established companies: A less-established company can aim for more ambitious growth. Just be mindful of diminishing returns, and understand how far you can stretch your growth ambitions.
Which marketing return on investment (ROI) target : When deciding what return on investment (ROI) to target in marketing, a high ROI may not always be the best choice. To achieve your growth goals, you may choose to invest profit margins in faster user growth. For example, if a $2 ROI delivers twice as much user growth as a $3 ROI, marketers may choose $2 as a target even though it is the second-best option for profitability. Sometimes the right goal is the one that keeps your company in business.
Key takeaways:
Business objectives should be measurable and include a clear timeframe. There are four types of objectives:
- Financial objectives
- Strategic objectives
- Marketing objectives
- Advertising campaign objectives
When determining your business objectives, you should:
- Identify your financial and strategic business objectives
- Convert your financial and strategic business objectives into marketing objectives
- Convert your marketing objectives into advertising-campaign objectives
