Get Keep and Grow. Cost of Customer Acquisition. Viral Coefficient.

1. Class 5 / 12
March 3, 2014
Jen van der Meer | jd1159 at nyu dot edu
Josh Knowles | chasing at spaceship dot com
LEAN
LAUNCHPAD
AT NYU ITP
Rockets Sketches borrowed from Harry Allen Design

2. Teams present
Guest Speaker Albert Lee
Get Keep Grow
TODAY:

3. .
WE ARE HERE
1/27
Business Models
Customer Development
UX Tools Intro
2/3
Value Proposition
UX Tools, Frameworks
2/10
Customer Segments
Research Tools
2/17
President’s Day
2/24
Revenue Streams
Distribution
Product Definition
3/3
Customer Relationships
Partners,
Product Development
3/10
Resources,
Activities, Costs,
Product Development
3/17
Spring Break
3/24
Customer Development
Product Development
3/31
Customer Development
Product Development
4/7
Customer Development
Product Development
4/14
Customer Development
Product Development
4/21
Product MVP
4/28
Lessons Learned

5. What are the 3 components?
Get
Keep
Grow
(The most important hypothesis)
CUSTOMER RELATIONSHIPS

6. What’s their role
Who are they
How do they buy
What matters
What pain is being solved for them
CUSTOMER ARCHETEYPES

7. CUSTOMER RELATIONSHIPS: DIGITAL

8. CUSTOMER RELATIONSHIPS: PHYSICAL VS DIGITAL

9. STRATEGY + TACTICS
Physical Digital
GET Strategy: Awareness, interest,
Consideration, Purchase
Tactics: Earned Media, paid
media, online tools
Strategy: Acquire, activate
Tactics: Websites, appstores,
search, email, blogs viral social
nets, reviews, pr, free trials,
home/landing page, webinars
KEEP Strategy: Interact, Retain
Tactics: Loyalty programs,
product updates, customer
surveys, customer check-in calls
Strategy: Interact, retain
Tactics: Customization, user
groups, blogs, online help,
product tips, bulletins, outreach,
affiliates
GROW Strategy: New revenue, referrals
Tactics: upsell, cross sell,
referrals, unbundling
Strategy: New revenue, referrals
Tactics: upgrades, contests,
reorders, refer friends, upsell,
cross sell

10. THE VIRAL LOOP

11. How much will it cost us to get an “activated” customer?
“CAC” is cost of all of your sales and marketing expenses over a given period of time,
divided by the number of customers acquired in that window.
Why this is valuable – test different tactics against each other, and understand how to
create a customer acquisition system with you at the help of the inputs.
Bessemer Cost of Customer Acquisition:
http://www.bvp.com/sites/default/files/cac_ratio_-
_one_number_to_manag__your_saas_sm_spend_-_october_2008.pdf
CUSTOMER ACQUISITION

12. CAC Ratio 1Q2015 = [Gross Margin (2Q15) – Gross Margin (1Q15)] *4
Sales and Marketing Costs (1Q15)
The CAC ratio determines the payback time on your sales and marketing investment:
a CAC ratio of 0.5 for example means that half of your investment is paid back per
year, so it is a two year payback period.
Bessemer Cost of Customer Acquisition:
http://www.bvp.com/sites/default/files/cac_ratio_-
_one_number_to_manag__your_saas_sm_spend_-_october_2008.pdf
CAC RATIO

13. The viral co-efficient: the average number of invitations sent by each existing user
times the conversion rate of invitation to new user. The viral coefficient is referred to
as the K value.
THE MAGIC ACCELERATOR: THE VIRAL LOOP

14. Lean Analytics, Alistair Croll, Benjamin
Yoskovitz
SAAS CUSTOMER
LIFECYCLE

15. Google Forms – free but you have to find your list
LinkedIn Polls
Free: if you’re already connected to your audience
Fee: to survey a specific demographic
Paid Survey Audience
B2B: Thinkspeed.com $3 - $5k survey design based on audience
B2C: SurveyMonkey.com/mp/audience: $3.00 per finished response for standard
demographics, requires a $20 professional plan
Buying Facebook audiences (requires a FB account)
TESTING BEFORE YOU HAVE A PRODUCT

16. What are your priority segments?
What are your value proposition hypotheses?
What is your call to action in your marketing test?
Where will you test?
KEY MARKETING LEVERS TO TEST

17. 17

18. Strategic alliances
– Social media software and WPP, Omnicom, Publicis
Joint new business development efforts
– Intel inside, Retail co-ops
Co-opetition
– Industry week (adweek, fashion week)
Key supplier relationships
– Historical relationship between Microsoft, Dell, and
PARTNERS

19. Hypothesis to get:
Acquisition
Activation
What is your hypothesis to keep:
Outreach
Events
Loyalty
Product updates
What is your hypothesis to grow:
Upsell
Cross-sell
Next-sell
Referrals
WHAT WILL YOU TEST?

20. 20
WHAT CAME BEFORE STEVE AND ERIC

21. FOR POST SPRING BREAK

22. .
NEXT WEEK PREP:
REFINE YOUR SEGMENTS – EVERYONE’S SEGMENTS ARE TOO BROAD.
Watch Lecture on Activities, Resources and Costs
Read: Business Model Generation 226-261.
Presentation:
· Cover slide
· Latest version Business Model Canvas with changes marked
· Results of last week’s experiments. What passed, what failed, what did you
learn?
· Proposals for next week’s experiments. What constitutes a pass/fail signal for
each?

23. NEXT: CANVAS REVIEW AND
FEEDBACK