customer acquisition and_retention_strategy_v10_kd
TRANSCRIPT
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Customer Acquisition and Retention StrategyAndy [email protected]
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Challenges Quantifying customer behavior and tying it
to ROI
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Consumer AB Test Performance3
Very Poor Poor Neutral Good Very Good0
12.5
25
37.5
50
0%
70%
5% 7%14%
18%
Conversation Rate Lift Performance
(≤5%) (-5% to -1%) (-1% to -1%) (1% to 5%) (>5%)
The majority of ideas are neutral
or negative
Perc
enta
ge o
f To
tal Te
sts
56%
7%5%
A histogram of all the tests performed by the consumer optimization team reveals that the vast majority of ideas proposed to improve the site were either neutral or had a negative impact on conversion.
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Defining an evaluation framework4
88%The majority of people who indicated some interest in mobile devices never found a product or category page.
Fallout from Awareness to Consideration
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Pepsi had a similar problem
5
Making small incremental changes can result in a big impact on conversion
CONTROL
100%
TEST
What looks best is not necessarily what’s most effective in achieving business.
Increase in conversion rate
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The FrameworkAB testing is a tactic. We need a way to
evaluate why and how it is to be deployed
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Business ObjectivesGrow Revenue• Customer acquisition• Frequency of purchase• Increase basket size
Reduce Costs• Reduce customer acquisition
cost• Loyalty / return engagement• Advocacy / referral
First Step: Define Business Objectives
Strategy• Return engagement • Content messaging• Learn / test / implement
Tactics• AB testing • Segmentation – learn• RFM analytics• Promote • Gamification
Next, develop a strategy to achieve business objectives. Then use tactics to implement the strategy.
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AwarenessRetargeting, email, search, display…
Consideration• Landing pages • Product category pages• Content based algorithms
Purchase Intent• Shopping cart• Collaborative based
Loyalty• Post checkout • Email reminders
At Samsung we learned the that primary variable for predicting purchase intent was contract renewal.
We could then target the right customer with the right message at the right time.
Each step in the customer journey will have specific triggers that will drive customer behavior.
Samsung Shopper Marketing Journey Map
Purchase• Shopping cart
Learn
Buy
Get
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Measuring SuccessIf you don’t know where you’ve been,
how do you know where to go?
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http://techcrunch.com/10/29/how-to-measure-the-true-stickiness-and-success-of-a-facebook-app/
The primary predicator of future revenue growth is return engagement.A pillar of any sales strategy. WIIF
M
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Appropriate measurement will help influence the optimal strategy.
Product Value Messaging Strategy
Promotional Pricing Strategy
Engagement
Sale
s
For Pizza Hut we were able to regress engagement with respect to sales and prove that a product messaging strategy was superior to coupons.
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Putting it all togetherImplementing the Framework:
Tactics and Tools
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How to implement a strategy: Target & tailor communication to customers:
identify need and problemVirtuous Cycle: Learn, Test, Implement, an iterative Agile Framework
Learn, Test, Implement are the tactics: This is how you develop, test, and refine strategy.
Short iterative cycles mitigate risk. These tactics are used to make process more efficient. Ultimately, you build a better product.
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CUSTOMER ACQUISITION COST < Lifetime ValueCreating a strategy requires a process of discovery to find the correct balance.
CAC < 1$
LTV > 1.10$
10 mil
DAUDaily active users
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COST PER CHANNEL / CUSTOMER BOOKING
Paid Search $274
Travel Channel $441
Email $12
Organic $7
Affiliate $193
Display $625
Social $-
Total CAC $177
Paid Search
Travel Channel
Organic
Affiliate
Display
Social
Total CAC
CUSTOMER ACQUISITION COST by CHANNELClick-based attribution model reveals CAC for display is greater then $600 with a LTV of half that. We are loosing money for every new customer.
EXAMPLE
Optimize display ads and lower the cost through testing and ideation
The example comes from an online travel agent
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FUTURE CALL CENTER LTV
LAST YEAR 2013 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
% Will Repeat Next Year 20% 15% 12% 10% 9%Call Center Cost Per Transaction $50 Average Revenue / Transaction = $2,519 $491 $388 $290 $251 $221 Discount Rate 8%NPV Of Transactions $3,872 Margin 10%LTV Customer $387 % Increase 5%
CUSTOMER LIFETIME VALUE (LTV)CAC for display is $387 which is far less then LTV. We can either increase retention or increase conversion by targeting the right customers with the right content at the right time.
OVERALL INCREASE PROFITABILITY 10%
5% increase in retention = 30% increase in LTVEXAMPLE
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Learn your audience.You can not optimize the experience without knowing who you are targeting.
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Segment and Survey
Gain a deep understanding of what makes buyers buy…What are the objections that qualified buyers have?Match the pages purpose with what customers want.Variable effecting conversion: • Load time • Design• Content• Concrete and emotional vs. intellectual and abstract• Promotional messaging • More detailed product pages • Personalize • Value proposition
Once you know who your customers are find out what is important to them. How do customers define their needs?
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Develop some ideas. Once we have done the initial analysis we are able to create some ideas that can then be tested.
• Know the bottlenecks and opportunities
• Know your customer• Develop some ideas to test
around the needs of these customers
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Ideate using AB testing to understand behaviorTest for discovery not just validation A – Control
B – Test
95%visitors
5%visitors
20% conversion
50% conversion
Goal Wireless/home
Wireless/home
AB Engine
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The value in A/B testing is learning
This combination saw an increase of 40% in sign-ups that resulted in $60M in incremental
donations.
The Obama campaign used simple multi-variant testing on their donor pages which tested many different images, CTAs, and headlines.
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Goal is to create alignment internallyMarketing efforts are currently not consistent with landing page content.
Marketing needs to be optimized for landing page content through an imperial methodology of testing and discovery.
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Engagement = SalesOver time there is a direct correlation between sales and optimal content strategy
Sal
es
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What is next? What have we done and what
needs to be done?
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Thank You
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KEY INSIGHTS
• Seasonal spikes occur in January and August time frame. However, purchasing does occur rear round.
• People are browsing midday during the middle of the week on a work computer, mobile, or tablet device.
• Purchasing is occurring in the evening on home computer presumably after talking to husband or partner.
• Purchase consideration may take 2 weeks to one day. However research and planning may start 2 or more months prior to purchase. (More research required.)
• Consumer skews towards educated females between 25 and 35.
• Customers are looking for:
• Ease of use
• Transparency in pricing
• Product focused messaging around needs of the customer
EXAMPLE