Business circles in India are starting to buzz with a new P-word. Instead of "pandemic," or "post-pandemic," "profitability" is now top of mind for discerning leaders.
Many may know the math for growing profitably but not the multiplier for making it happen.
The opportunity for brands to grow, and to do so profitably, comes on the back of strengthening consumer sentiment. Even as supply chains faced vulnerabilities and interest rates rose, India’s Consumer Confidence Index continued to climb, hitting a two-year high of 84.8 points in January 2023.
To ride on this optimism and grow profitably, it makes sense to apply the math for it: maximize revenue and minimize cost. This might be common knowledge to many, but not all may be aware of how marketing can be a powerful multiplier in this equation.
By applying the right principles, a business can use marketing to win more customers with a higher customer lifetime value, and do so at the same, or even lower, acquisition cost. This supercharges growth and profits.
The following three principles can help you achieve your business goals with marketing, and they can be applied across all industries. In this instance, we’ve included examples of how leading finance brands used the principles to multiply their results.
1. Align marketing goals with business objectives
A fundamental principle for growing profitably is to align your marketing goals with your business objectives. This lets you focus your marketing effort, which can deliver results in various business areas, on the most critical ones — such as revenue and profits — and accelerate growth in those areas.
In practice, this means close collaboration between the CMO and CFO. When both leaders are on the same page about how marketing goals directly translate into financial KPIs, they can easily identify opportunities to fund growth and boost profits through marketing.
One such example is the close partnership between the CFO and CMO of leading health insurer Star Health and Allied Insurance.
To achieve your aligned goals and drive profitable growth, use marketing strategies that are optimized to deliver a high return on ad spend (ROAS) and low cost of acquisition. This is what leading general insurer Tata AIG did to grow its travel insurance business with marketing.
Having aligned its goals and moved from generating leads to acquiring valuable customers, Tata AIG used Target ROAS bidding to maximize the ROI of its Search campaigns. The marketing solution allowed it to prioritize the acquisition of customers who show intent to purchase high-value policy products. This resulted in an 8% higher revenue, a 34% lower cost per acquisition, and a 126% higher ROAS
2. Invest in effective marketing channels
It’s also important to invest in marketing channels that are effective for driving profitable growth. While this might seem like common knowledge, in practice, the many marketing channels available means it’s easy to end up spending on those that don’t directly deliver growth and profits.
An effective marketing channel is a digital channel that lets you measure consumer signals in real time and at great speed and scale. This allows you to swiftly respond to customer needs and make agile and precise business decisions that directly drive profitable growth. It also lets you test and learn optimal approaches to marketing, and freely adjust your marketing investment to achieve profit maximization.
Kotak811, for instance, was able to grow its digital savings service profitably by investing in effective digital marketing channels.
Its test-and-learn approach with App campaign for installs drove a 41% increase in app installs and a 50% lift in account openings at flat costs. So it shifted its marketing investment in the digital channel toward the winning approach, and ramped up growth and profits.
3. Identify and optimize toward the most valuable customers
Focusing on your most valuable customers — those who are recent buyers, who spend more, and who purchase frequently — is another way to grow your business profitably. And with marketing, you can find and convert these customers at scale and lower costs.
Take leading financial institution Bajaj Finserv, as an example. It used Discovery, a highly scalable full-funnel marketing channel to generate eligible leads and engage valuable customers.
With its first-party data, it was able to identify valuable customers — those who not only had purchase intent, but who were also trusted borrowers. It then ran a Discovery campaign that was optimized to focus on these customers and engage them.
The result: It generated leads at a 51% lower cost, and improved the cost of eligible leads by 19%.
2023 presents opportunities for your business to continue to grow profitably. By aligning your marketing with business goals, investing in effective marketing channels, and optimizing toward valuable customers, you can help your business supercharge growth and achieve profit maximization.