Customer Acquisition and Viral Marketing

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Customer Acquisition and Viral Marketing

  1. 1. VOCINOLABS
  2. 2. Customer Acquisition & Viral Marketing
  3. 3. Viral marketing is not a marketing strategy.
  4. 4. ‣ Develop your product ‣ Plan how to make people use it ‣ Declare viral marketing is one of n approaches (along with SEO, SEM, PR, etc)
  5. 5. Forget about adding "viral" to your marketing to-do list after your product is already on the market. You need to bake it into your business model from the very beginning.
  6. 6. CPA + COS must be lower than Lifetime Value
  7. 7. Sustained Viral Growth
  8. 8. ‣ Have an awesome product (ideally in communication or social content) ‣ Convert user growth ideas into Excel-based hypotheses and clear user funnels ‣ Build and track each step of your funnels ‣ Get initial stream of traffic (Adwords is a great start) ‣ Optimize until every user is bringing in at least one new user
  9. 9. ‣ No single feature determines the viral factor of the product. ‣ Instead, it’s part of a viral loop that connects a set of functions into a cohesive motivation for the user to tell their friends/network. ‣ If the fundamental product doesn’t drive a viral motivation from its users, then it’s very difficult to force it.
  10. 10. We have Product X, how do we virally spread it like freaking crazy!?@#$ We have Viral Loop X, what’s the right product to fit into it?
  11. 11. ‣ Not really something in the domain of PR, advertising and marketing people. ‣ Nor in the world of hardcore technical peeps that can architect systems but not consumer interactions.
  12. 12. ‣ Understanding the motivations behind user behaviors ‣ Understanding and exploiting the technical loopholes to create viral loops
  13. 13. You’re not simply depending on making something really cool so people spread the word. You’re making something automatic.
  14. 14. ‣ Sources of traffic ‣ Landing page views ‣ % of users that register ‣ % of users that send out invites ‣ # of invites sent out, per user on average ‣ % of invites delivered successfully ‣ % of invites read by users ‣ # of virally added users, per user on average
  15. 15. Viral Loops
  16. 16. ‣ What things do people share and what tools do they use for communication? ‣ Files, wikis, contacts, links, information, show-offs ‣ These are your viral channels (vs. news feeds, Facebook notifications, etc.) ‣ If your value proposition can align with a channel, then you might make it viral ‣ Case study:
  17. 17. ‣ First encounter is embedded on some other page ‣ If you like it, embed it yourself. ‣ Otherwise, more relevant videos available.
  18. 18. What’s your viral media? ‣ E-mail, Facebook newsfeed, blogs, etc. ‣ How difficult is it to integrate into their surface and what’s the response rate? ‣ If response rates are low, that means huge difference in outcome.
  19. 19. What’s your funnel design? ‣ As short and accessible as possible. ‣ Each page is a barrier to leap. ‣ Assume a percentage of attrition for registration complexity. ‣ 2-3 Pages at the most.
  20. 20. Register Use Evaluate Share Register Share Use Evaluate
  21. 21. What’s the viral hook in your product? ‣ Bad product will adversely affect viral experience ‣ Deep personal expression works best (music, avatar, slideshow, etc) ‣ Communication mechanism (voice, text, etc)
  22. 22. What are the onramps? ‣ Your site ‣ User profile ‣ User dashboard ‣ Between two other steps ‣ Before evaluation, if possible
  23. 23. Value Propositions for Viral Loops
  24. 24. Best value proposition is like ‣ Great for both parties (incentive and value for inviter and invitee)
  25. 25. Worst value proposition is like Apps ‣ Little to no value for either party (lots of chum, feels very spammy)
  26. 26. Viral Loops for You & Your Clients
  27. 27. ‣ Social Proof: Quizzes, Badges, Founding ‣ Reciprocity: Top friends, eCards ‣ Scarcity: 8 invites left!
  28. 28. Paid User Acquisition
  29. 29. ‣ Start with your laundry list of acquisition ideas ‣ Search, “tell a friend”, Twitter, Facebook, etc. ‣ Convert into 2 or 3 testable hypotheses
  30. 30. Buy users at $1 Monetize at $5
  31. 31. 20% of registered users will import address books Less than 5 of their friends will register
  32. 32. ‣ CPM = Cost per Thousand ‣ CPC = Cost per Click ‣ CPA = Cost per Acquisition ‣ COS = Cost of Service ‣ LTV = Lifetime Value Everything rolls back to how much it costs you to have a registered user.
  33. 33. CPA + COS must be lower than Lifetime Value
  34. 34. ‣ Cost per Acquisition ‣ Efficiency of media (traffic sources, CTR, Impressions) ‣ Signup funnel conversion % ‣ Average viral invites sent out
  35. 35. ‣ Cost of Service ‣ Infrastructure (servers, bandwidth, storage) ‣ Employees? ‣ Support?
  36. 36. ‣ Lifetime Value ‣ Retention metrics ‣ Revenue mix ‣ Viral factor
  37. 37. Source Ads CTR Clicks Signup % Action % Users Cost CPA G 1M 0.5% 5k 20% 50% 500 $5k $10 Ad 20M 0.10% 20k 10% 50% 1k $20k $20 G = Google Adwords Ad = Advertising.com
  38. 38. Type Options Importance Source of Traffic Ad networks, publishers ++ Cost model CPM, CPC, CPA + User requirements Install, plug-in, flash +++++ Audience and theme Horizontal vs. vertical ++ Funnel design Landing pages, length, fields +++ Viral marketing Facebook, OpenSocial, email +++++ A/B testing process None, homegrown, Google +++++
  39. 39. ‣ How are you paying for traffic? (CPM/CPA/CPC) ‣ What do the intermediate metrics look like? (Impressions/CTR/etc) ‣ How does your signup funnel perform? ‣ How much are you spending for the users you end up registering?
  40. 40. Optimize Funnels by Brainstorming Levers
  41. 41. ‣ Newly registered users come in (both paid and viral) ‣ Some % of these users convert into paying users ‣ Some % of these users send off viral invites ‣ Revenue is generated by building up a base of paying users ‣ Cost is generated by building up a base of active users (paying or not)
  42. 42. Optimization isn’t obvious. ‣ The placement of the button? ‣ The color of the button? ‣ The fact that’s it’s a button and not a form? ‣ The fact that it’s “Add to your network” rather than “Add a friend”
  43. 43. the ultimate lever is retention
  44. 44. LTV = rev + rev*R + rev*R^2 + rev*R3 + … LTV = 1/(1-R) * rev
  45. 45. At a 50% retention rate: LTV = 1/(1-0.5)*$1*1000 = $2000 At a 75% retention rate: LTV = 1/(1-0.75)* $1*1000 = $4,000
  46. 46. ‣ Product design ‣ Notifications (optimize, optimize, optimize) ‣ Ease of use (kill frustration whenever possible) ‣ Saturation effects
  47. 47. reinvest in acquiring more users
  48. 48. ‣ Paid user acquisition is usually an upfront expense whereas the revenue comes in over time ‣ Your revenue per paying user depends on a mix of revenue sources ‣ You pay “cost of service” across all users, paying, free, visiting, etc.
  49. 49. Further Reading & Research
  50. 50. ‣ “Viral Loop” Adam Penenberg ‣ “Influence: The Psychology of Persuasion” Robert Cialdini ‣ “Landing Page Optimization” Tim Ash ‣ “Metrics for Social Games” David King & Siqi Chen

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