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Online Customer Acquisition Strategies Primer (For Startups)

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Primer of various online marketing and customer acquisitions strategies such as Search Engine Marketing (SEM), Affiliate Marketing, Lead Acquisition, Email Marketing, Retargeting, Social, Search Engine Optimisation (SEO), PR & Bloggers.

Presented to London Business School MBA students on November 20th.

Published in: Marketing, Business, Technology

Online Customer Acquisition Strategies Primer (For Startups)

  1. 1. ONLINE CUSTOMER ACQUISITION STRATEGIES PRIMER (FOR STARTUPS) London Business School November 2013 Kiyan Foroughi – CEO, Boticca
  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. #BoticcaLBS 2
  3. 3. 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 #BoticcaLBS 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 #BoticcaLBS 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 – – – It’s immediate! Fastest way to scale Very measureable Pros Cons – – – Dependency on Google Can become very expensive Large budgets required Mistakes we made: – – Who does it work for – – Businesses who sell brand name or commoditised products Businesses with high AOVs and margins 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 #BoticcaLBS 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 – – CPA-effective Very measureable Pros Cons – – – – Affiliate recruitment time/resource intensive Takes a while to scale Limits to how much it can be scaled Technical integration Mistakes we made: – – Who does it work for – Businesses who can offer some margin to partners 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 #BoticcaLBS 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 – Ability to segment and send personalized messages directly Ability to retain customers Ability to A/B test Pros – – Cons – – Results are not immediate Deliverability and renderability are key to success Mistakes we made: – – Drew conclusions from database sizes that were too small (less than 50,000) Got some emails from competitions (lower quality) Who does it work for – Most online businesses that offer constantly new products or services (not so effective with content-led businesses) TEST BUDGET: > £5,000 Per Month (£1-3 per email) #BoticcaLBS 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 – When optimised, is usually quite a CPAeffective channel Can be personalised (should be) Pros – 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 #BoticcaLBS 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 – – – Deep segmentation capabilities Direct engagement with your users SEO benefits as social signals are factored into Google’s algorithms – Generally an expensive and low conversion channel with poor ROI channel Pros Cons 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 #BoticcaLBS 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 – – Quality, targeted traffic Content marketing can also help PR/branding – – – 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 Pros Cons – Who does it work for – 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 Pretty much everybody #BoticcaLBS 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 – – Not easily replicable (PR) Hard to measure ROI (PR) Cons 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) #BoticcaLBS 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 #BoticcaLBS 12
  13. 13. Thank you! Questions? kiyan@boticca.com Slides available here: http://tiny.cc/BoticcaLBS

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