Customer Acquisition Strategies (for Front Row I/O)

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This is a presentation I made to startups at the Front Row I/O accelerator on April 15th regarding customer acquisition strategies for startups.

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Customer Acquisition Strategies (for Front Row I/O)

  1. 1. Customer Acquisition Strategies Front Row I/O April 2014 Kiyan Foroughi – CEO & Co-Founder
  2. 2. 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. #Boticca 2
  3. 3. BOTICCA OVERVIEW Boticca is the world’s luxury bazaar of fashion accessories 370+ brands in 40+ countries and 11,000+ pieces available Pieces shipped to 60+ countries each month 700,000+ 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 #Boticca 3
  4. 4. 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 < CLTV Your customer acquisition strategy/mix will also depend on your unit economics such as Average Order Value (AOV) and margins #Boticca 4
  5. 5. 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 margins 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 #Boticca 5
  6. 6. 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 partners 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 TEST BUDGET: > £3,000 Per Month #Boticca 6
  7. 7. 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) 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) #Boticca 7
  8. 8. 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 Mistake we made: – Used bigger retargeting specialists like Criteo who offer no customization of banners (looked ugly) TEST BUDGET: > £2,000 Per Month #Boticca 8
  9. 9. 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!) 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 TEST BUDGET: > £1,000 Per Month #Boticca 9
  10. 10. “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 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 #Boticca 10
  11. 11. “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) 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) #Boticca 11
  12. 12. 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 #Boticca 12
  13. 13. Any questions? kiyan@boticca.com Thank you!

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