The virtuous cycle of online marketing

Hearing about or knowing how to use various online marketing tactics doesn’t deliver as much value as understanding the underlying dynamics of marketing and the tangible value these bring to a business or an organisation.

Whether online or in the traditional business world, the fundamental dynamics are the same for the most part. However online marketing has more affordable, and more important, measurable tools.

This sounds like a lot of common sense but it is too often overlooked when defining a marketing plan.

The fundamentals of marketing revolve around 3 major steps to develop your business and sell your products and services:

1. Create awareness

Creating awareness about your product is usually associated with promoting your product. The underlying dynamic however is building trust. If you can gain an individual’s trust, you’re likely to convert him or her into a customer and make a sale.

At first creating awareness can be extremely costly and time consuming.

2. Increase business

Increasing business is usually directly related to creating awareness. However if you haven’t been able to build trust, you won’t gain repeat business and you’ll only be able to rely on creating awareness which is costly.

The underlying dynamic of increasing business is creating loyalty. If you have loyal customers, you have repeat business and a customer base.

3. Build a customer base

Your customer base is what is going to keep you in business and help you expand as the base grows. It is also a formidable asset to create more awareness. You will of course create more awareness only if you deliver on your promises and you are able to sustain the trust you’ve built.

Your biggest (and mostly free) reward for having a satisfied customer base is word of mouth promotion. There is nothing more effective to promote a product or service than to have someone you trust telling you about it.

Measure and repeat

When well executed, this virtuous cycle helps you expand your business and minimize your promotional costs.

But you need to know what is happening and what part of the cycle has the most or least impact. Once you measure the impact on sales from your promotions and the amount of repeat business from your customer base, you can reinvest in the right areas to increase your growth.

These 3 steps reveal 3 important business dynamics which should be the main focus of any business or organisation:

1. Build trust

If your service or your product fails, you will lose the trust of your customers. If your sales people or your customer service are inefficient and fail, you will also lose the trust of your customers.

Building trust means providing a consistent, professional, and reliable customer experience with your products and services. Failing to do that will negatively impact the success or pace of growth of your business.

2. Creating loyalty

It is believed that it is more expensive to acquire a new customer than to keep one satisfied. A loyal customer is likely to buy your products or services again and to tell his friends and family how satisfied he is with your brand.

3. Develop word of mouth

You should aim at developing word of mouth. It is the most effective and least expensive marketing tactic out there. There are many ways to create incentive for your customers to spread word of mouth recommendations (the subject of a future blog post).