7 Steps to Optimize and Scale Profitability in Your Digital Online Business
So here’s the thing!!
Everyone is going or has gone digital!!
What does that even mean? Do you know?
For sure not a whole lot of us do!! But we all use the phrase…
Don’t worry, you are such in good company, even the experts defer on the meaning, turns out there are several different views on what the exact definition is, for example according to Gartner digital business is the creation of new value chains and business opportunities that traditional businesses cannot offer, Mckinsey on the other hand opines that “digital should be seen less as a thing and more a way of doing things.” Accenture states that “Digital businesses create competitive edges based on unique combinations of digital and physical resources.
They are all right, depending on where your business is and where you want to get to. A digital business is more than e-commerce, or selling goods and services online. To make it clearer see below, common concepts which apply to digital businesses.
- Technology is used to create value at new frontiers and in new ways for the business.
- Technology is used to drive growth and revenue in ways in ways which could not have been done traditionally.
- Technology is used to develop a better customer experience.
- Technology is used to gain competitive advantage, either in terms of cost cutting (reducing overhead costs) or increased profits (creating more value add for customer).
Clearly then, an online business, which simply refers to any business that has business activity online or uses the internet is not a digital business. Customer behavior is changing at an alarming rate, it’s no longer enough to be an online business, digital adoption has become an integral part of business growth and survival. And it’s not just about the pandemic, this change is here to stay and will evolve at an even faster rate!! As a business you will need to accommodate, satisfy and even anticipate these new attitudes and behaviors.
To create a successful, profitable and sustainable business you must work at it and have a strategy which is adaptable and agile enough to stay ahead of the competitive and fast paced market.
You are probably thinking…can we get to the 7 steps you promised already?
Here you go:
- Focus on meeting customer needs by reimagining services– Become adept at correctly (using digital tools) identifying customers evolving needs and tailor existing products or services to meet them speedily.
Quite a number of businesses will find that they won’t be able to offer some previous physical services, or some goods may not sell as much (Covid era). Take the example of a hotel, you cannot offer your normal services right now, should you think of creating a digital food delivery section, or even set yourself up as a paid isolation care center?
If you already had a delivery option as part of your previous offerings, would you consider taking in delivery orders from other businesses and expanding that segment of the business.
The most important thing here is to secure your present customer base, do not lose your customers. This period has seen a whole lot of businesses lose their core customers due to an inability to meet their needs either in terms of availability of product or service, convenience, or reachability.
- Increase your backend and upselling/cross-selling activities- Your backend customers account for more of your revenue, at least 36% of people who have patronised you previously will do so again if they were satisfied and if you follow up on them. Which is why we say data is king!!
It is absolutely necessary to know who your customers are, what they buy, how often they buy it. Depending on the nature of the product/service, it is possible to send reminders and messages, follow up unobtrusively and offer like products, discounts, loyalty coupons or just keep in touch.
Upselling is easy if you are using the right platform, you can add it on as a bundle at checkout, introduce complimentary or supplementary items and make suggestions of items that go along with the purchased product. Just like Amazon does. If you are truly digital, AI can make this a breeze!!!
- Take a position, choose a niche and elevate your brand– You can choose to elevate your brand by using technology to add more value, differentiate your product and then increase your price. Customers typically do not mind paying a bit more for quality. What is most essential is that you add value.
A couple of weeks back my husband stopped at an eatery to buy takeout. He got home and discovered to his disgust that the size of the servings had reduced, and so had the quality of the meal, the price however was the same. His remark was that it would have been so much more preferable to have paid more and gotten better value.
Build a great brand and price yourself accordingly. That’s why we buy Channel bags right?
- Use your first-party data to your advantage- First-party data is data that you get from CRM and other touchpoints during your interaction with your customers. Used correctly, it is a very critical and irreplaceable tool for improving your marketing abilities and ensure proactiveness and innovation in customer satisfaction because it gives you clear insights into who your customers are and the types of goods or services they want/need.
Boston Consulting Group studied how companies use first-party data to build stronger customer relationships by giving customers a better and more relevant experience, the result of this study was that companies which link all of their first-party data sources outperform those with limited data integration in important metrics.
It’s a no brainer really, if you use this information to build a better more fulfilling and satisfying online experience for your customers you strengthen your relationships, lay claim on higher customer loyalty and less attrition, this results in more conversions and you get a higher ROI.
- Eliminate waste!!- Note to self- eliminate, not reduce.
Traditionally there are two ways to increase your profitability- increase revenues or reduce costs. Obviously, this speaks to reducing cost. Run through your entire process from start to end, if done thoroughly you will be able to identify areas to cut down.
Going digital has an initial investment which almost immediately starts yielding reduced overheads. An example if you operate an online digital business, you reduce cost of manpower, use virtual assistants, you can also streamline your supply chain and distribution process by incorporating tools which automate these processes.
Interestingly enough, you can use AI to match customers’ needs and reduce wasteful spending by optimising stock volume vis a vie conversions or conversion value. Check out this tool a beauty brand uses to grow their revenue.
- Build a location not a business- Yes, you heard me, a location. Your customers should not be just customers, but community members. So, build a community which is a place that people look forward to coming to, this increases loyalty, remember that they may be able to get variations of your product elsewhere, but if they are community members they will come for the relationship.
You should have your online community across different platforms not only on the internet.
A strong, vibrant community will also help in understanding consumer behavior better, you can conduct surveys, get more insights, and even allow suggestions that will improve your offerings.
Do remember that a community needs great content and sustained engagement.
This step is not a quick fix, takes time, but trust me on this it’s such a worthwhile investment.
- Invest in digital marketing- This is a must do!! When I say invest, I mean knowledge wise and financially. I could write a whole book on this!!
The digital channels opened doors to consumers and moved them from passive participants in marketing to very active drivers.
Digital marketing is simply the promotion of products or brands using electronic devices or the internet. It is extremely vast, and we can’t do justice to it here, but we will look at the most popular channels. There are quite a number of channels and it is very important for you to know and understand their scope, this will determine which channels are appropriate for your brand or business to utilize in your marketing strategy, not every one is relevant depending on your business, brand, market and industry. The right channel for your brand or business depends on your brand, your goals and your target market. It also varies in B2B, B2C etc.
I’ll just mention the different channels and I encourage you to go and read up more on them.
- Social media
- Responsive website
- Search Engine Marketing (SEM) -Search engine optimization (SEO) and Paid Searches
- Email marketing
- Content marketing
- Online display marketing
- Mobile marketing
If you take these steps and implement them in your business, you could very easily see an increase in profitability of at least 15%.
You can find some really unbelievably free, cool tools to digitize your business here.
Nnenna Jacob-Ogogo is the Founder of Impactherbusiness.org, an organization which seeks to provide support and nurture for female SME’s and cater to the woman as a whole being. She is passionate about empowering women economically because she believes in the spillover effect to the community at large. She loves God and is happily married with four children and a wonderful husband.
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