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A Guide to Strategic Financial Planning for 2023

A Guide to Strategic Financial Planning for 2023

Last Updated:  
June 6, 2023
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One of the few things we can say with certainty about the past few years is that eCommerce performance is incredibly unpredictable. The events of 2021–2022, from exponential increases in advertising costs to a post–pandemic retail buzz to a looming recession harming consumer confidence, would have been nearly impossible to take into account in any forecasting or budgeting plans.

So how do we even start thinking about planning for 2023?

Tom from Rozee Digital has streamlined the procedure into three crucial strategic steps, concentrating on the data that we DO have access to.

A freestanding caution sign to warn walkers that the ground is slippery.

Determine the limiting factors for your brand

Consider the main reasons that are impeding the performance of your brand, before even looking at your 2023 budget. Before investing in growth potential, the "leaky bucket" issues should be prioritised in next year's plans.

What are the common issues that our agency encounters?

Decreasing brand demand as a result of reduced prospecting efforts

Many marketers have switched to concentrating on profitability over the past year, lowering prospecting spending and concentrating instead on capturing active demand through ‘search’. While this strategy boosts profit margins in the near run, it falls short in terms of long-term demand growth.

Instead of taking a compartmentalized channel approach, it's important to have a holistic view to all Paid investments in order to better measure the value of prospecting efforts. This includes using the Marketing Efficiency Ratio (MER) as a KPI.

More and more customer returns

As reported by ASOS, this tendency has a substantial influence on profitability. It is not news that many firms have experienced an increase in consumer returns. While there are various measures to help stop this trend, such investing more significantly in customer service, considering charging for returns like Zara, or offering more pre-purchase educational content on the site, this could be partially ascribed to a general shift in customer behavior.

Every brand will be faced with different challenges, so it’s important to identify what these are and diagnose the underlying reason, before defining the action plan and investment required.

Think about your "Quick Wins" against your "Long-term Gains"

Prior to allocating funds, it's critical to evaluate the possible effects of any growth opportunity because of the time and financial constraints. Similar to identifying the issues that are restricting your brand's growth, it is important to map out all the potential future growth prospects to determine which will have the greatest influence.

We advise separating your growth opportunities into those that can be implemented right away and have immediate benefits from those that will take longer to materialize. While doing so will demand more resources, the effects will grow over time. For instance:

Customer Experience

Not wanting to state the obvious, but your customers, and in particular returning loyal customers are key for your brand to survive and flourish, even during difficult times.  You don’t want your brand's website to turn into an empty ‘high street’ shop.

Similar to entering a shop you want a good customer experience - the same applies to your website. Make sure you include things like user-friendly navigation, personalized recommendations and perhaps include User Generated Contents (UGC) landing pages & product pages.

A photo of  two people working on a website wireframe on a desk.

Make sure your website is user-friendly and easy to navigate. Include having a clear and organized layout, fast loading times, intuitive search and filtering options.

Invest in reducing customer returns as these are impacting on your profitability.  A lot of brands during 2022, as mentioned above, have noticed a change in customer habits with a considerable increase with returned goods.  

Build a pre-order educational item guide or consider charging for returns.  A lot of brands are starting to charge now, so don’t feel you will be at a disadvantage.

Making email more profitable by at least 20%

Brands frequently spend thousands of dollars on prospecting efforts without having an email channel that is optimized. This is not only a lost opportunity to target prospects who are similar to existing customers and encourage them to make purchases in a very cost-effective manner, but it also makes prospecting less successful.

Invest in an effective follow up with customers after their purchase to ensure they are satisfied with their experience and address any concerns they may have. This can improve customer satisfaction and help build a positive reputation for your business.  Be mindful not to flood the customer with emails which turn the customer towards your competitor.

Allocate marketing funds to maximizing segments of repeat customers

It may be 6-7 times more cost-effective to drive sales from current customers than to find new ones. As a result, you should really make sure that your marketing is set up to maximize sales from this segment. Setting up or optimizing Loyalty Programs and Paid Advertising campaigns could be a part of this year's efforts to increase revenue by the end of 2023 from repeat customers by increasing their frequency of purchases.

Product Development

Another area to invest in is your product offering. This can involve introductory or bundle offers or investing new, innovative products or increasing the variety of options available to customers. This can increase customer loyalty and importantly more orders.

Organic & Paid Marketing Channels

Organic & Paid marketing channels can help drive traffic and sales to your website.  You can’t just have a website and expect customers to visit you.  Utilizing Paid social & Paid search, you can reach a larger audience and tailor your messaging to specific demographics and interests.  

Using social media not only promotes your business, it also allows you to connect with your audience on a more personal level. By responding to their comments and engaging with followers, you can start to build trust and establish yourself as a credible source of information.

Additionally, utilizing social media for customer service can also drive traffic and sales, which improves the customer experience and builds brand loyalty. Make sure you have a system to promptly respond to customer inquiries and complaints.

Use your existing customers as they can be a lot more cost effective than acquiring new customers.  Remember, returning customers;

  • Are easier to sell to
  • Tend to spend more money
  • Promote your brand
  • Build your Business
A 3D model of a small printer printing out a receipt.

Establish your budgets and KPIs

Once you've gone through the process of identifying your brand's primary growth-promoting objectives, you're prepared to start allocating your budget. Tom @ RozeeDigital has worked with with numerous eCommerce and retail firms over the years, on their annual strategic planning and budgeting:

Be reasonable when using success measurements

It's crucial to control expectations if your company has aggressive growth goals for acquiring new customers because KPIs will need to change to meet these goals. Since it typically takes prospecting campaigns a few months before audiences make their first purchase, there will likely be a decline in direct ROI, but the ultimate objective is to increase the number of new customers over the year.

Think about your market-specific budgets and channel mix

It's crucial to make sure your budget isn't being overspread while working with multiple markets. We advise establishing market and channel specific KPIs as part of this approach because outcomes will vary depending on different levels of brand awareness and advertising expenditures. This will then assist you in determining the appropriate budget for each market and distribution channel.

Invest in projects that will improve marketing results

Components like photoshoot and creatives can be played down when it comes to budgeting because the ROI is obscured. However, it's crucial to make sure that funds are allotted to goods and initiatives that will help with enhanced performance, such as regular content creation for higher Paid Social CTR.

Easy Checkout for Customers

Avoid items being left in the chart.  Ensure you have easy multiple payment options, including popular credit cards and PayPal as well as alternative methods like Apple Pay and Google Wallet.

A photo of a work team in a training, all looking at a large screen.

Training

Finally, invest in training - your employees are your business, so develop them with good educational courses.  Even if the training appears expensive, remember a good team will drive your business growth.

Unforeseen issues

Always set aside money in your budget for unforeseen issues that may arise throughout the year and for trying out new ideas, such as distribution methods.

Strategic Financial Planning for 2023

It can be tempting to just duplicate 2022 budgets into 2023, however with the last few year’s events and the threat of a recession this is very unwise and could significantly impact on your brand’s growth.  There are many areas to consider strategically when it comes to eCommerce budget investments in 2023. There are also ‘quick wins’ if you plan strategically and prioritize your investments. By using some or all of the suggestions in this blog into 2023’s strategy planning, it will help drive customer satisfaction, customer loyalty and therefore business growth, flourishing into 2023 and beyond.

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