What is the business model ? It is the way you make money. Your business model is always changing, reflecting the objectives and strategies you decide to pursue.
This week, I’m addressing two other important elements of conducting a successful ecommerce business: establishing goals and developing strategies to encourage them. If you have done a fantastic job of thinking through your business model and how the different components will need to work together, you likely have already developed many of your business plans. Now it is time to tie your plans to quantifiable objectives. Then you’ll use the company model as the framework of reference to measure your risk and likelihood of success in attaining your targets.
On Aims, Strategies and Tactics
Business owners, consultants, and workers are usually confused about how to go about establishing goals, tactics and strategies, or what they really are. A excellent article on the definitions and where those concepts originated thousands of years back is a 2009 posting on Brand Insight Blog. I will also spend some time clarifying things from the report.
- Objectives. Should set a quantifiable and realistic target to attain. Set your goals before deciding on strategies. Examples may include: (a) Increase sales by 30 percent in 12 months; (b) Achieve a 15 percent market share by 2013; (c) Improve earnings by 15 percent within two quarters. Goals can be in the company level or a lower operational level, but I am focused on the larger image encouraging your overall business model today. Therefore, if your business model is set up to be a high margin business, then your goals will need to support that method of creating money. To be real, a target has to be measurable and have a realistic opportunity to be successful.
- Strategies. An idea on the best way best to achieve your business objectives. Let’s say your objective is to increase sales by 30 percent in 12 months. An alternative approach might include adding new products to increase top line revenues. Or, improve the overall conversion rate for all visitors to your site. Another may be to get your current customers to buy more from you. It’s a fantastic idea to have more than one approach to encourage a target. Just be sure you have the ability to execute all of the strategies successfully.
- Tactics. Individual plans and activities to support the larger strategic ideas. Approaches to encourage improving your overall conversion rate could be: (a) Redesigning your shopping cart to decrease abandonment; (b) Offering more incentives to purchase now as shoppers are on your cart; (c) Improving the rate of your site; (d) Adding an alternate payment method to your own checkout; and (e) Remarketing to people who abandon their shopping carts. Generally, you’ll have a number of strategies that are used to be prosperous in your strategy.
An article in Brand Insight Blog helps to understand the concepts of tactics and strategies.
Why Bother to Set Goals?
You may be asking yourself why even bother to set goals. I can not imagine not setting company goals because those aims are what’s going to drive your plans and business execution.
Whether you’re a startup struggling to develop your business model, an existing company fighting to remain alive, or a high growth firm, goals establish your organization framework. Let us step out of the ecommerce world for a minute and consider how most folks purchase a new house.
Imagine if you’re searching for a new place to call home. First, you think of what you’re searching for in your new home or apartment. What size? Where’s it located? Do you buy or rent? How many bedrooms? How large a payment can you afford? How much maintenance is needed? What colleges are nearby? Is it near public transport? Think of this as your home model.
Next, you want to decide what your objectives are. Let us say they are supposed to get a home within 20 miles of your workplace within the next 6 weeks. Your plan is to get help finding the ideal home from a real estate agent rather than to search for yourself. Your strategies might include interviewing agents, looking online for agents who have listings in the region where you wish to live, and to participate family and friends about a referral to a broker. You might also visit a lender and receive pre-approved for a loan to smooth the procedure.
Developing Ecommerce Goals
Now imagine you have an ecommerce company that’s plodding along, but you need to boost your profits. You’ve got your business model in place with one online shop selling a product to a broad sector. You do your own fulfillment and customer service and have a set of manufacturers which produce your merchandise for you.
Begin by setting a high-level small business aim of improving your earnings by 15 percent over 12 months. You choose a few strategies that you will support that aim. First, you’ll search for a new line of widgets that appeal to kids. Second, you will expand your stations to find new clients. Finally, you will explore new branding opportunities for your present widgets to create more demand for your goods.
Your tactics may consist of doing market research with children to find out what sort of products they like. Then, you might search for a way to target your present products to kids. You might also build a customized product for kids. Finally, you might research opening up a new site targeted at kids.
To support new stations, you might research marketplaces such as Amazon and eBay stores. You may also opt to market your products as a wholesaler into physical channels to reach customers who don’t shop online.
Finally, to expand your brand, you might take part in social media campaigns, establish a Facebook and Google+ brand page, and expand your advertisements in magazines read by prospects. You might also hire a new agency to make a more modern logo and messaging.
As you proceed through this process, it is the thinking that’s critical. Ensure that your business strategies support your business objectives. Always ensure that your company goals are achievable within the framework of the company model you’ve developed. When they don’t, but they’re a priority, then you might want to rework some elements of your business model.
Should you pursue a singular strategy of enhancing sales by adding new products and you’re doing all of your own warehousing and fulfillment, develop strategies to encourage that. However, you must be certain they fit in your business model. It’s unrealistic to pursue a goal of 50 percent sales increase by tripling the amount of products that you carry in your stores when you’ve got no more space in your warehouse to match extra stock and people to perform fulfillment. But, you might have the ability to target Amazon for the earnings growth and allow it to perform the fulfillment for you. Likewise, you might choose a tactic to include online chat to decrease cart abandonment, but if you do not outsource that or hire a new person, another area of your company may break as your workers attempt to encourage the new chat actions.
There’s danger in every aspect of planning your business. To do any sort of preparation, you need to make assumptions. Lots of men and women avoid planning and budgets since there are several assumptions made. I see planning as a vision which you support with as many facts and as much knowledge as possible to identify and minimize your risks.
Each assumption you make has risk associated with it. In my next article, I will discuss how to identify your risks and mitigate or lessen the risks associated with your assumptions about your business model and your strategies and tactics.