Step 2: Design the Model: Let’s Take A Look at Tukaluk
This is the second in the series called “Let’s Take A Look at Tukaluk”. This series of articles will apply the concepts of the Intentional Marketing System as outlined in the book recently published by Joanne O'Connell and myself.
For a full description and more details, use this link to purchase a copy of Intentional Marketing: A Systematic Approach to Optimizing Performance.
For this series, we are developing a customer acquisition model for the marketing operations of Tukaluk Campground and Cabins. This business is owned by Calgary-based investor and entrepreneur David Cooper. He has kindly allowed us to use his marketing data.
In our first article, Step 1: Asking Important Questions, we laid the groundwork for understanding key questions related to starting this project. This followed our previous series, "10 Things I Learned from Joanne," which began with Each Level of the Model Must be Measurable.
Step 2 – Design the Model
In this article, we dive into Step 2: Design the Model (page 29). This step falls under Phase 2 – Build the Model, where we aim to construct a model that accurately depicts the marketing and sales activities of a business. The five phases of the Intentional Marketing System are as follows:
Developed by Tanya White
The customer acquisition model is a foundational part of the Intentional Marketing System and encompasses Phases 2 and 3. Unfortunately, many companies lack such a model. The model tracks key marketing activities and includes calculations for essential metrics, primarily ratios, which reflect marketing performance.
The culmination of Phase 2 is the creation of a Marketing Statement, similar to an income statement in a company’s financial documents. The Marketing Statement starts with broad numbers and narrows down to smaller numbers, providing a clear overview of what is happening in the marketing system.
As outlined in our book, the generic customer acquisition model (page 5) includes five generic levels. Advertising dollars are typically spent at the level of impressions, referred to as investments in the Intentional Marketing System. In the model, investments may be required at any level, from acquiring impressions to nurturing prospects and compensating the sales team.
Developed by Tanya White
The Design Diagram
There are about six actions related to designing a diagram of the customer acquisition model. These actions are:
Define the outcomes
Outline the levels
List the channels
Define the financial measures
Estimate the ROMI
Create a diagram
1. Outcomes
Stephen Covey lists “Begin with the End in Mind” as Habit 2 in his best-selling book, The 7 Habits of Highly Effective People. As a result, it makes sense for us to start by defining the outcomes of the customer acquisition model.
The ultimate purpose of the Intentional Marketing System is to improve the outcomes. Even though outcomes is the last step in the customer acquisition model it is likely the most important level. Low performance at this level means that revenues will be less than desired.
The outcomes for Tukaluk are:
Reserve a campground site
Reserve a cabin
Both outcomes can be initiated from the website either by sending an email or making a reservation on Airbnb. These are the measurable behaviours. See Lesson 9: Understanding Outcomes.
There are 2 outcomes. Sometimes, this requires designs for two models. It depends on the situation. For example, a company may sell products to retail customers and to businesses. If the approaches to marketing are different then it is better to design two models.
In this case, however, the products and buyers are very similar. It could be that the people reserving cabins are a different segment from those reserving campsites. Specifically, campers bring their home with them and cabin dwellers don’t. In addition, the price point is different — a cabin costs more per night.
The key question is “Are the marketing campaigns and the message different for each segment?”. If Tukaluk was a million-dollar operation, then the answer might be “Yes”. The marketing budget for the campground is about $6000 per year so there is not enough to invest in targeted campaigns. Most of the marketing is organic and costs very little beyond creative effort.
2. Levels
The diagram shown above has five generic levels. In the diagram, prospects are listed before offers.
In our book, we define prospects (page 162):
Prospects are people in the market who are potential buyers, meaning
that they intend to buy a product from a company at some time
in the future.
The definition of an offer is (page 161:
An offer occurs when a price for a product is shown or given to a
prospect in the market.
The situation for Tukaluk Campground is a bit different. Offers, which include a price, are available on the website and a person doesn’t become a prospect until they phone, email, or register on Airbnb. The levels for prospects and offers are reversed — the offers are first. As a result, in the model, we need to switch the levels to look like this:
By Jeff Nelson
3. Marketing Channels
The next action related to designing the customer acquisition model is to figure out what marketing channels are being used. From the website, we can determine that the business is using the following social media platforms:
The website is https://www.tukaluk.ca/. In the source code can see the identification number for Google Analytics 4.0. The presence of a website assumes that they are using or should be using SEO to increase the number of visitors from organic searches.
id=G-9VK02YFY0L
They have a Google Business page:
They might be using but it is hard to tell:
Google Search Ads
Google Display Ads
Remarketing
YouTube Ads
For traditional advertising they have or should have:
Signage on the highway near the entrance
Billboards, north and south, increase awareness to prospective customers
Local newspapers
No doubt the company has Word of Mouth referrals:
Past guests
People in the nearby communities
Here is a list of detailed actions:
Start by listing these channels. Make sure there are measures.
Next figure out how each channel can be measured.
Have a look at Google Analytics is a good starting point. This will give a good understanding of visits.
Next, look at the data from each platform to find measures for impressions.
Then go back to Google Analytics and segment the data by page to find the users that are looking at the offer pages. This takes a good understanding of Google Analytics.
Find the number of prospects takes a bit of sleuthing. With Tukaluk, I’m anticipating that we can count up the number of emails and phone calls from people inquiring about the campground. Not everyone will make a reservation. That is why they are called prospects.
Finally, count the number of reservations. This will be each reservation no matter how many nights and how many people are guests. Just the number of reservations.
The diagram below shows the levels and the sources of measures:
By Jeff Nelson
4. Financial
If the marketing system is working correctly, we should make investments in marketing that generate revenue.
There will be investments in each of the marketing channels. There may be investments at different levels of the model. Typically, I only include “investments” in advertising. I ignore expenses that are structural like hosting the website and staff salaries.
We can add the financial part to the diagram:
By Jeff Nelson
5. ROMI
Ideally, revenues should be more than the cost of marketing and operating the campground i.e., a profit. From the point of view of the people doing the marketing, the part that they can control is investments in marketing. A nice number to know would be the multiple gained in revenue by the investments in marketing. This is what we call Return on Marketing Investments (ROMI).
At this stage, we don’t have the measures to make the calculation. This will come later. But we can predict what the multiple should be. In our experience, the number should be between 10 and 20. This means that for every $ spent, the investments and efforts in marketing should generate between $10 and $20. You can read more about this sweet spot here.
There are many formulas for ROMI but the formula that we like best is:
By Jeff Nelson
6. The Final Diagram
When we put all the components together the diagram of the customer acquisition model for Tukaluk Campground will look like this:
By Jeff Nelson
Conclusion
You don’t need to start with a fancy diagram. You can start to build a prototype of the model using a spreadsheet. But if you are working as part of a team or you are working with a client (as I am) developing a diagram of the customer acquisition model is a good place to start.
Let me know what you think. I’m all over social media. Send me a PM. Give me a call, 403-703-2247. Send a text. You can even send me an old-fashioned email.
And don’t forget to buy our book.