Online Customer Acquisition Strategies Primer (For Startups)

ONLINE CUSTOMER ACQUISITION STRATEGIESPRIMER (FOR STARTUPS)

London Business SchoolNovember 2013

Kiyan Foroughi – CEO, Boticca

AGENDA

• Boticca Overview• A Few Basics• Paid Channels

– Search Engine Marketing (SEM)– Affiliate Marketing– Lead Acquisition & Email Marketing– Retargeting– Social

• “Free” Channels– Search Engine Optimization (SEO) & Content Marketing– PR & Bloggers

• Other Things to Consider & Some More Tips

We won’t cover TV, Media and print/outdoor advertising as this primer is mostly for start-ups with more modest budgets.

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BOTICCA OVERVIEW

Boticca is the world’s luxury bazaar of fashion accessories

350+ brands in 40+ countries and 11,000+ pieces available

Pieces shipped to 90+ countries each month

500,000+ members with an average order value of US$185

Staff of 20 based in London

Backed by MMC Ventures, ISAI, Digital Garage and angel investors

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A FEW BASICS

Most online businesses live and die by their online customer acquisition strategies

You’ll need a formulaic, scalable acquisition strategy to be successful

Each business is different and so will your online acquisition mix

In the end, everything is governed by one relationship:

Cost Per Acquisition (CPA) versus Customer Lifetime Value (CLTV)

And the equation needs to look like this for a real, sustainable business:

CPA < CLTVYour customer acquisition strategy/mix will also depend on your unit economics such as Average Order Value (AOV) and margins

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PAID CHANNELS: SEARCH ENGINE MARKETING (SEM)

What is it?– Google Adwords– Display Advertising– Video/Youtube Ads

What you need to measure– CPCs, CTRs, Impressions, CPLs

Pros– It’s immediate!– Fastest way to scale– Very measureable

Cons– Dependency on Google– Can become very expensive– Large budgets required

Who does it work for– Businesses who sell brand name or

commoditised products– Businesses with high AOVs and

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Mistakes we made:– Burned through lots of budget before

realizing it wasn’t for us– Too much Adwords optimization, not

enough onsite

TEST BUDGET: > £10,000 Per Month

PAID CHANNELS: AFFILIATE MARKETING

What is it?– Performance-based marketing that

rewards partner sites (affiliates) for referring traffic and customers

What you need to measure– CPCs, CTRs, Impressions, CPLs

Pros– CPA-effective– Very measureable

Cons– Affiliate recruitment time/resource

intensive– Takes a while to scale– Limits to how much it can be scaled– Technical integration

Who does it work for– Businesses who can offer some

margin to partners6#BoticcaLBS

Mistakes we made:– Underestimated how time consuming this

channel can be– Didn’t put enough budget aside to book

and schedule tenancies to push top affiliates


PAID CHANNELS: LEAD & EMAIL MARKETING

What is it?– Acquisition of leads

(subscribers/emails) and activation via regular email marketing

What you need to measure– CPLs, Activation Rates

Pros– Ability to segment and send

personalized messages directly– Ability to retain customers– Ability to A/B test

Cons– Results are not immediate– Deliverability and renderability are key

to success

Who does it work for– Most online businesses that offer

constantly new products or services (not so effective with content-led businesses)

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Mistakes we made:– Drew conclusions from database sizes that

were too small (less than 50,000)– Got some emails from competitions (lower

quality)

TEST BUDGET: > £5,000 Per Month (£1-3 per email)

PAID CHANNELS: RETARGETING

What is it?– Targeting users off-site when prior

visits didn’t result in a conversion to bring them back on-site

What you need to measure– CPCs, CTRs

Pros– When optimised, is usually quite a

CPA-effective channel– Can be personalised (should be)

Cons– Need traffic volume– Technical integration– When done poorly, it can look like

stalking

Who does it work for– Most online businesses that where

the ultimate call to action is a sale or conversion

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Mistake we made:– Used bigger retargeting specialists

like Criteo who offer no customization of banners (looked ugly)


PAID CHANNELS: SOCIAL (FOR START-UPS, IT’S NOT FREE)

What is it?– Advertising and performance-based

marketing on social media platforms such as Facebook, Twitter etc.

What you need to measure– Member base and referral traffic– CPLs, CTRs

Pros– Deep segmentation capabilities– Direct engagement with your users– SEO benefits as social signals are

factored into Google’s algorithms

Cons– Generally an expensive and low

conversion channel with poor ROI channel

Who does it work for– Content-heavy websites– Nobody in ecommerce for driving sales

on a CPA-basis (as far as I know!)

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Mistakes we made:– Thought we could use social media to

drive sales! – Spent time on networks which were

popular but didn’t have our customer demographics


“FREE” CHANNELS: SEO & CONTENT MARKETING

What is it?– Raising the visibility of your website to

appear in natural search rankings of Google… I mean, search engines

What you need to measure– Natural search traffic and conversion– Individual keyword rankings– Site performance/speed– Domain authority and backlinks quality

Pros– Quality, targeted traffic– Content marketing can also help

PR/branding

Cons– To be done well, requires technical resource– Time-consuming– Good content marketing campaigns are hit

or miss– At the mercy of Google and their constantly

changing algorithms

Who does it work for– Pretty much everybody

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Mistakes we made:– Didn’t think it would take that long to scale– Didn’t put enough tech resource behind it– Releasing too many SEO-focused tech

changes at a time

“FREE” CHANNELS: PR & BLOGGERS

What is it?– Spreading the word about your

business via articles in the press (online/print) and via bloggers

What you need to measure– Publications and bloggers that

work/don’t work– Time/effort vs. returns

Pros– Elevates brand and trust which in turn

has a positive effect on the conversion rate of other channels

– High ROI

Cons– Not easily replicable (PR)– Hard to measure ROI (PR)

Who does it work for– Pretty much everybody but you

constantly need to have a story/hook with new information (with press)

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Mistakes we made:– Focused too much on business press as

opposed to consumer press early on– Overestimated how much you can scale

blogger marketing

TEST BUDGET: >£1,000 (for bloggers)

OTHER THINGS TO CONSIDER & SOME MORE TIPS

Don’t be afraid to test several channels and figure out what works for you

Don’t rely on one channel: have a mix

Data, data, data: Let the numbers be your guide

Depending on the channel mix, a good monthly test budget would be > £15,000-£20,000

Don’t forget to focus on the other fundamentals such as a strong, well-defined brand and a flawless customer experience

And never forget: CPA < CLTV

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Thank you! Questions?

[email protected]

Slides available here: http://tiny.cc/BoticcaLBS