Acquisition & Retention Strategy for an Online Campaign

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By Rajat Chadda, BE, MS, MBA
w: www.rajatchadda.com
e: rchadda@gmail.com

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  • Change in Customer behavior using Perceptual Maps
  • Acquisition & Retention Strategy for an Online Campaign

    1. 1. Marketing Case Analysis –<br />Driving a successful On-line Campaign<br />
    2. 2. Campaign Highlights<br /><ul><li> Online consumer program
    3. 3. Target Market: 40 to 60 year olds with specific behavioral characteristics  customer segments & value drivers!
    4. 4. 5 Marketing Channels: Online Media, Paid Search, Email, Direct Mail, Phone Sales (offline)
    5. 5. Marketing Interventions: free downloads, newsletters,
    6. 6. special offers, on-line access to tools, information resources
    7. 7. Annual Budget = $500,000</li></ul>Campaign Objective<br /><ul><li> Acquire 50,000 paid members over 1 year
    8. 8. Retain 40,000 of those members over next 6 months</li></li></ul><li>Tasks at Hand<br />1. Targeted Acquisition Strategy<br />2. Campaign Success Measures<br />3. Sample Metrics Dashboard<br />
    9. 9. Task 1<br />Targeted Acquisition Strategy<br />
    10. 10. Acquisition & Retention<br /><ul><li> Quantitative Cost-based approach:
    11. 11. Value for customer = Acquisition Cost (A)
    12. 12. Value of customer = Customer Lifetime Value (V)</li></ul>Why Cost-based approach ?<br /><ul><li> Optimize acquisition spending between various channels
    13. 13. Find good customers and bad customers
    14. 14. Retain good customers using marketing interventions</li></li></ul><li>Acquire<br />Not Acquire<br />a1<br />Direct Mail<br />1-a1<br />A1<br />A2<br />Acquire<br />Not Acquire<br />a2<br />Online Media<br />1-a2<br />Calculate Acquisition Cost<br /><ul><li> Spend $A per prospect,</li></ul> Probability (prospect converts into a customer) = a < 1<br /><ul><li> $A and a will be different for different channels
    15. 15. Say we try 300 prospects per channel & we acquire customers…</li></ul> A(Direct Mail) = $A * #prospects * a1<br />DM Customers = 10x[Seg1] + 20x[Seg2] + 100x[Seg3]<br /> A(Online Media) = $A * #prospects * a2<br />OM Customers = 100x[Seg1] + 20x [Seg2] + 10x[Seg3]<br />NOTE: Segment (mix of customers with specific value drivers) is abbreviated as “Seg”<br />
    16. 16. Why was that useful ?<br /><ul><li> Can break down Acquisition Cost per channel or per segment</li></ul> $A(Online Media), $A(Direct Mail), $A(Phone Sales), $A(Paid Search), $A(Email)<br /> $A(Seg1), $A(Seg2), $A(Seg3)<br /><ul><li> Pick channel with lowest cost & highest #customers</li></ul>  Cost Minimization  Increases ROI<br /><ul><li> Can optimize Acquisition spending</li></ul> 1. Sensitivity Analysis on probabilities<br /> - look at data from old campaigns for estimates of ‘a’<br /> - buy market research<br /> - test marketing<br /> 2. Refresh probability estimates as fresh data comes in<br />
    17. 17. Calculate VOC<br />Value of Customer =<br />Revenue from customer segment discounted @ 1.5yrs<br />$V(Seg1), $V(Seg2), $V(Seg3)<br />
    18. 18. Why was that useful ?<br /><ul><li> Compare $V(Seg1) vs. $A(Seg1):
    19. 19. If (V – A) is positive, these are good customers!
    20. 20. If (V – A) is negative, these are bad customers!
    21. 21. Can rank most profitable segments based on (V-A)
    22. 22. (V – A)[Seg1] > (V – A)[Seg2] > (V – A)[Seg3]
    23. 23. Customers who are lower in value are hit with marketing</li></ul> interventions, so they change behavior & move UP the value chain<br /><ul><li> Optimize retention spending:
    24. 24. Sensitivity Analysis on Customer Life
    25. 25. If customer stays 3 yrs  V rises  ROI increases</li></li></ul><li>New ideas so customers subscribe<br /><ul><li> Use email to invite User Generated Content
    26. 26. builds a network or fortifying community effect
    27. 27. Prioritize premium content using search ranks
    28. 28. web content strategy – improves company’s ranking increased customer acquisition
    29. 29. Virtuous Circle: Best Content  More Customers  More ROI!</li></li></ul><li>Task 2<br />Campaign Success Measures<br />
    30. 30. Success Measures<br />1. Status Measures<br />2. Decision Aiding Measures<br />3. Web Content Measures<br />
    31. 31. Status Measures<br /><ul><li> Current market share, Change in market share
    32. 32. Overall growth rate, YoY / QoQ Growth rate
    33. 33. Overall ROI
    34. 34. BCG Matrix
    35. 35. Total membership, # of Members per segment
    36. 36. New members per month
    37. 37. Upgrade / Downgrades of memberships per month
    38. 38. Cancellations per month
    39. 39. Segment-wise growth rate
    40. 40. Increase/decrease in revenues & costs per segment
    41. 41. Change in Gross Profit / Net Income due to campaign
    42. 42. Acquisition Spending per channel / per segment
    43. 43. Retention Spending per channel / per segment
    44. 44. Current pricing</li></li></ul><li>Decision Aiding Measures<br /><ul><li> Change in consumer perceptions using Perceptual Maps
    45. 45. Campaign positioning vs. Segment positioning
    46. 46. Segment drill-down metrics using Pivot Tables (e.g. # of customers spending using Email channel and living in a zipcode M5B2X2)
    47. 47. Probability of Success vs. Profitability using V-A analysis
    48. 48. Most to least profitable channels
    49. 49. Most to least profitable segments
    50. 50. Customer Lifetime Value per segment
    51. 51. #Prospects vs. Conversion Rate
    52. 52. Regressions – strongest predictors of ROI, membership etc.
    53. 53. Industry or Macroeconomic variables
    54. 54. Brand perception, metrics on competitors etc.</li></li></ul><li>Web Content Measures<br /><ul><li> Conversion Rate for Lead Generation
    55. 55. New Visitors, Unique visitors/page, Time on Page, Bounce rates
    56. 56. Performance measures i.e. page load times, data access times, search query times, report generation times
    57. 57. Micro-conversions per page i.e. #downloads, #forms filled, #information resources used, signups etc.
    58. 58. Recency-Frequency-Magnitude i.e. #visits, visits/day, last visit, time spent, pages/visit etc.
    59. 59. SEO parameters:
    60. 60. Inbound links – referral sites ?
    61. 61. Outbound Links – where did they go ?</li></li></ul><li>Task 3<br />Sample Metrics Dashboard<br />
    62. 62. Role-based info-graphics: users, information they need, decisions they will make<br /><ul><li> CEO expects summary dashboard
    63. 63. Analyst expects detailed metrics
    64. 64. Tools: Use case diagrams, Data flow Diagrams in Visio</li></ul>Value added features:<br /><ul><li> Scheduling and alerting of reports generated via email
    65. 65. Custom Reports – adding a user generated metric or report format
    66. 66. On-the-fly annotations to reports like inferences</li></li></ul><li>Campaign “LoremIpsum” Dashboard – CEO Level View<br />ROI (%)<br />Scorecard<br />Market Share ($)<br />Selection List:<br /><ul><li> last month
    67. 67. last 2 months
    68. 68. last quarter
    69. 69. last 6 months
    70. 70. 2010 / 2009 / 2008
    71. 71. till date
    72. 72. date range</li></ul>Selection List:<br /><ul><li> by geography
    73. 73. by segments</li></ul>ROI<br />Gross Profit <br />Turnover<br />Net Income<br />Overall Growth Rate<br />Segment Growth Rate<br />Size of Customer Base<br />Schedule vs. Cost Variance($) <br />10<br />
    74. 74. Campaign “LoremIpsum” Dashboard – CEO Level View<br />Customer Base<br />Annotations Included<br />Customer Base<br />11<br />
    75. 75. Campaign “LoremIpsum” Dashboard – Analyst Level View<br />ROI (%)<br />Cost Predictors<br />3rd Quarter<br />Segment A<br />Results of Regressions<br />Segment Slices by Attribute<br />12<br />
    76. 76. 10<br />Campaign “LoremIpsum” Dashboard – Analyst Level View<br />Web Traffic Analysis<br />Funnel Charts for Lead Generation Analysis<br />13<br />
    77. 77. Recommendation<br />Let’s launch this On-line Campaign<br />

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