presents

Introduction to Paid Customer Acquisition

ANDREW KREBS-SMITH NOAH FREEMAN

Andrew Krebs- SmithAndrew Krebs-Smith is the President/Founder of Social Fulcrum, a digital marketing agency in NYC and Boston. Before founding Social Fulcrum, he developed and managed marketing campaigns for accounts including Pfizer, Ocean City MD, The National Aquarium, and Strayer University. Andrew loves food, travel, music, exercise, and tea.

Noah FreemanNoah Freeman is the Vice President of Acquisition and Analytics of Social Fulcrum, a digital marketing agency in NYC and Boston. In addition, he manages the online customer acquisition campaigns for Testive and Working Advantage. Noah's an expert in Facebook advertising, in addition to having heavy experience in search retargeting, site retargeting, custom audiences, automated email management, email marketing, & lead nurturing. A graduate of Harvard, Noah most recently attended Startup Institute Boston in the technical marketing track.

Intro  to  Paid  Customer  Acquisition

Andrew  Krebs-­‐Smith  -­‐  @AndrewKS  Noah  Freeman  -­‐  @noah_freem

What  we  will  be  going  over

• Intro  to  customer  acquisition  • Key  Metrics  

• COCA  • LTV  • ROI  

• Choosing  the  right  Channel

Intro  to  customer  acquistion• Marketing:  Customer  Acquisiton  

• Free  (ish)  • Organic  search  • Inbound  Referrals  • Word  of  mouth  • PR  

• Paid  • Online  Ads  • Offline  Ads  (newspaper,  TV,  Radio,  magazines)  • Direct  Mail  

• Sales-­‐  Turn  leads  into  sales  (only  used  for  some  products)

What  are  you  trying  to  accomplish?

• Direct  sales  • Customers  go  online,  see  an  ad,  go  to  your  site,  buy  a  product  • Customers  sign  up  for  a  free  trial  with  path  to  revenue  later  !

• Indirect  sales  • Leads:  Customers  give  phone  #/email,  then  do  a  sales  call  • Trials:  Customers  sign  up  online  to  trial  something  in  the  real  world  • Email  list  signup:  Customers  sign  up  for  emails  • Customers  become  regular  readers  of  your  site,  then  buy  something  later

Match  the  goal  to  the  product

• Tie  of  the  month  club-­‐  $25/month  • Online  SAT  tutoring:  $1K/3  months,  unknown  brand  • Sell  a  Ferrari:  $200K  one  time  sale  • Dropbox

What  we  will  be  going  over

• Intro  to  customer  acquisition  • Key  Metrics  

• COCA  • LTV  • ROI  

• Choosing  the  right  Channel

Cost  of  Customer  Acquisition  (COCA)Steps  in  the  funnel:  

• Impressions  • Priced  as  CPM  =  “Cost  per  1,000  impressions”  • Determined  by  

• Who  the  audience  is  • Ad  platform  • Ad  type  (newsfeed  vs  sidebar,  etc)  

• Clicks  • Click  through  rate  x  cost  per  impression  =  cost  per  click  • Determined  by:  

• Quality  of  ad  • Match  of  ad  to  audience  

• Post  click  conversion  • Cost  per  click  x  conversion  rate  =  cost  per  acquisition  • Determined  by  

• Quality  of  site  • Type  of  action  required  (signup  for  email  list  vs  buy  a  ferrari  online)  • Match  of  audience  to  site  

• Post  conversion  sales  • Some  products  require  post-­‐convsersion  sales  step  

• COCA  =  (CPM/1000)  x  (1/click  through  rate)  x  (1/conversion  rate)  x  (1/post  conversion  sales  rate)

Impressions

Clicks

Convert  once  on  site

CTR

Conversion  Rate

How  to  minimize  COCA• Buy  as  few  impressions  as  necessary  

• Only  show  ads  to  people  with  a  high  likelihood  of  buying  !

• Get  a  lot  of  clicks  • High  quality  ads  well  matched  to  channel  • Find  the  audience  most  likely  to  click  !

• Get  post  click  conversion  • Have  great  landing  pages  • Different  audiences  will  have  different  conversion  rates  !

• Have  as  few  steps  as  necessary

Great  Landing  Pages

• Your  home  page  is  NOT  a  landing  page  • You  may  need  a  lot  of  different  landing  pages  • Components  of  a  great  landing  page:  

• Short  description  of  what  you  are  selling  • VERY  LARGE  calls  to  action  • Very  few  options  that  are  not  desired  action  • Very  short  #  of  clicks  between  landing  &  completing  action

A  great  landing  page

Exercise:  COCA

Crossfit  Gym  • Path  to  sale  

• Customers  see  a  facebook  ad  ($10  CPM)  • They  click,  go  to  a  landing  page  (2%  CTR)  • They  give  their  email  address/phone  to  get  a  free  class  (5%  conversion)  • Sales  person  calls  them,  schedules  free  class  (70%  never  get  in  touch)  • They  go  to  free  class  (50%  show  up)  • They  sign  up  for  a  membership  (50%  sign  up  from  free  class)  

• What  is  COCA  • What  changes  could  they  make  to  decrease  COCA?

Key  trick:  UTM  Tags

• What  they  are:  • Tags  at  the  end  of  URLs  that  identify  ad  

• When  to  use  them  • Each  ad  should  have  its  own  UTM  code  • All  ads  should  have  a  code  

• How  to  use  them  • Lets  you  calculate  CTR,  conversion  rate,  COCA  BY  AD  • https://support.google.com/analytics/answer/1033867?hl=en  (google  “UTM  builder”)

What  we  will  be  going  over

• Intro  to  customer  acquisition  • Key  Metrics  

• COCA  • LTV  • ROI  

• Choosing  the  right  Channel

Lifetime  Value  of  Customer• Revenue  per  sale  

• #  of  items  per  sale  x  revenue  per  item  

• Gross  margin  • Profit  per  item  /  Revenue  per  item  

• #  of  sales  per  customer  • Over  lifetime  of  customer,  how  many  purchases  do  they  make?  • If  it’s  a  subscription,  how  many  months  do  they  stay  around?  !

• LTV  =  Revenue  per  sale  x  gross  margin  %  x  #  of  repeats  • LTV  =  (#  of  items  per  sale)  x  (revenue  per  item)  x  ((item  sales  price  –  item  cost)/(item  sales  price))  x  (#  of  sales  per  customer  over  lifetime)

LTV  Exercise

• Selling  Neckties  Online:  • $25/tie,  $10  cost/tie,  average  2  ties/checkout.      • 2.5  repeats  per  customer  • What  is  LTV?  !

• How  can  we  increase  this  LTV?

Ways  to  maximize  LTV

• Increase  dollars  per  checkout  • Sell  higher  cost  items  • Sell  bundles  of  many  items  !

• Increase  Gross  Margin  !

• Increase  repeat  rates  • Actively  market  to  your  past  customers  to  remind  them  • Sell  subscriptions  and  auto-­‐renewals!  • Good  products  &  customer  service

What  we  will  be  going  over

• Intro  to  customer  acquisition  • Key  Metrics  

• COCA  • LTV  • ROI  

• Choosing  the  right  Channel

Marketing  Return  on  Investment

• ROI  =  (LTV)  /  (COCA)  !

• ROI  decision  making:  • <1:  you  are  losing  money  on  your  ads.      

• You  need  to  increase  LTV,  or  decrease  COCA  • =1:  breakeven.      • >1:  You  are  making  more  money  than  you  put  in.    Advertise  more!  

• Beware  cash  flow  issues  with  long-­‐period  LTV

What  we  will  be  going  over

• Intro  to  customer  acquisition  • Key  Metrics  

• COCA  • LTV  • ROI  

• Choosing  the  right  Channel

Which  channels  to  chooseChannel Subtype Demand  Creation  vs  

FulfillmentAudience  Selection

Facebook Social • Demand  Creation • Who  is  fan  of  what  page,  who  is  friends  with  who.Facebook   Targeted  

Paid• Demand  Creation  • Demand  fulfillment  for  

identity/interest  based  

• Who  they  are  (demographics)  

• What  they  are  Google   Adwords   • Demand  fulfillment • What  they  search  for

Google   Display • Demand  creation  • Demand  fulfillment  if  

well  matched  to  site

• What  site  they  are  on  (interest)

Other  Sites

Display • Demand  creation  • Demand  fulfillment  if  

well  matched  to  site

• What  site  they  are  on  (interest)

Which  channels  to  choose  (Part  2)Channel Subtype Pro Con

Facebook Social • Cheap  to  free • Very  labor  intensive  • Less  functional  in  “new  

facebook”Facebook   Targeted  Paid

• Insanely  niche  targeting  capabilities  

• Very  effective  when  

• Technically  challenging  interface  

• Only  works  if  well  Google   Adwords   • Very  effective  for  right  product  

• Simple  creative

• Clicks  often  expensive  • Needs  sufficient  search  

volumeGoogle   Display • Good  for  non  time  sensitive  products

• Creative  can  be  challenging

Other  Sites

Display • Great  for  very  targeted  niches

• Negotiated  individually,  requires  creative

Exercise:  What  Channels  to  use:

• Heating  Oil  Delivery  • SAT  Tutoring  • Card  that  combines  all  your  credit  cards  • Discount  shopping  browser  plugin  • Necktie  of  the  Month

Course Title  

Course Title

INSTRUCTOR NAME