HOW TO CREATE COMPETITIVE ADVANTAGE THROUGH A DIGITAL STRATEGY
The Digital360 founders knew nothing about the business, but that was part of the plan because Cleanawater was a living, working case study into how digital technology could gain a competitive advantage for a business.
By many measures, it was a success. They bought the business for $150,000, and when they sold it five years later, in September 2015, the price was $1.5 million. Revenue was up by 1,266 per cent, and profitability grew by more than 2,512 per cent, from $16,000 in the first year to $423,000 in the fifth year.
Laurie, who previously worked in product development for Sensis, says that the aim of buying Cleanawater was to get out of his comfort zone - he did not want to be able to take advantage of prior knowledge or existing contacts to grow the business. Just digital strategy.
The aim was to develop a track record for their business plan before it had launched.
"We always wanted to go to a digital agency, but it is difficult for business owners because everyone out there is explaining what can be done, or what can be achieved, but they are never 100 per cent sure," says Laurie.
"We knew that if we implemented a data driven strategy with a focus on quality rather than reducing costs then we could grow the business very, very quickly.
"But how do you explain that to someone who is not from a digital background? That is why we purchased the Cleanawater."
They chose the business because it was established, produced quality products, and its existing digital investment was small. And they knew nothing about it.
"For a true test we had to enter a business where we had no background and no understanding in order to demonstrate what we achieved," says Laurie.
When Laurie and Dalessandro bought the Melbourne-based business they reverse engineered software to match its needs. The fundamentals of the Cleanawater campaign included website development, user experience improvements, analysis and optimisation, and brand identity.
As part of the study, Cleanawater spent 6.5 per cent of turnover on digital, and relied only on inbound calls to sell products - there were no outbound calls or external salespeople. Purely through a digital spend, the business grew new inbound leads from two to 30 per week.
"We integrated our phone calls and digital marketing programs and assessed our cost per conversion, then we were also able to take the next step and integrate that with who ended up as customer, then look at things such as cost per client and return on investment," says Laurie.
"We take the data from wherever we can find it and wherever it is applicable, whether that is the customer database or digital marketing programs, integration, phone call tracking."
This data driven philosophy is not a "magical thing", says Laurie; "there is a lot of misunderstanding out there".
"It is about using small, minute numbers to get a competitive advantage. The small numbers compound out to big numbers. If I can get cost per click 10 per cent less, or a one per cent higher conversion rate, those numbers compound out to big numbers."
Laurie looks at digital as an investment, rather than an expense.
"Part of what people struggle with is that they consider digital technology as an expense that needs to be minimised. We need to demonstrate that it is not a cost to business, you can embed it into a business model and unlock further value.
"Because most business owners are used to physical assets, such as trucks, machinery and tools and they know how to measure the output of that asset, they traditionally haven't seen the same digital technology it is something they can't touch, they shy away from and want to minimise the cost.
"We have demonstrated that it can be used as an investment to grow a business very quickly."
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