Tuesday, May 29, 2012

Stroll's first step to success: Unraveling the riddle of online customer acquisition

Everyone remembers the dot-com bubble of the late 90s and its subsequent collapse during 2000 to 2001. Right after the bubble burst, online advertising also took a hit and became much more affordable than the ridiculous costs and expectations of when sock puppets ruled the world.

That deflation convinced me online marketing was the wave of the future, and it could achieve the economics needed to drive triple-digit sales growth for products and companies. It was then that I realized the more I could entrench myself in all things online, the more successful we would become as a company.

This is when I started unraveling the riddle of online customer acquisition. I found that the secret ingredient to a successful online customer acquisition strategy is to target one advertising channel at a time (unless you've got the money to burn).

Focus is key to mastery. Regardless of the channel -- whether it's paid search, co-registration, online display advertising, or whatever -- you have to build your competency one pillar at a time, honing in and optimizing performance before spreading yourself, your company, and your resources too thin.

See, here is where many companies go wrong. They're scattershot. They run after anything that shows promise, rather than focusing, concentrating, and figuring out how to wring the greatest possible return from the opportunity at hand.

Stroll was one of these companies at first. We tried to go off in too many directions simultaneously, and it prevented us from gaining traction anywhere. So I took the advice of "Rich Dad Poor Dad" author Robert Kiyosaki to "FOCUS: Follow One Course Until Successful." We cut away some branches and concentrated our efforts.

The first customer acquisition channel I mastered was email marketing. It's also one of the most difficult because while it's relatively new, it's based on the fundamentals of direct response, requiring the right list and targets, a compelling ask, a unique selling proposition, an emotionally charged story, and of course, a way to capture response.

But it was our focus that allowed us to grasp email marketing, and begin the endless process of improving customer acquisition. Obviously, since then we have moved on to other channels. But looking back, here are the four fundamental rules I learned during our growth:

1. Don't listen to naysayers. When I first had the idea of using email marketing to sell language learning products, others said I was crazy. But I realized it was important to at least test the thesis. I convinced a direct response agency to work with us. At first, the results weren't spectacular. But they were enough to convince us of the promise of this single channel.

2. Don't be a bad rabbit dog. A bad hunting dog will come into a field and follow every trail, no matter how old. They are diverted easily and end up chasing every scent that's out there. They never catch their prey. But great hunting dogs work fields systematically. They immediately prioritize scents according to which is most recent. They lock onto that one trail and block everything else out of their minds. They stay on the trail to the exclusion of everything else. Once successful, they move on to the next field, smarter in what they have just learned. The corollary? Be the good rabbit dog. Master one field at a time. Don't take off after every scent. Rather, lock on, build your competency, and then use what you have learned in new fields and channels.

3. Test, retest, tweak, and optimize. While our first attempts at customer acquisition weren't spectacular, they did suggest potential. So we refined the list. Changed the targets. Adjusted the ask. We added emotion to the sell. Sometimes, we would change only a single word or image. That alone improved our results, and led us to small, incremental changes that, made over time, compounded our success, and unlocked triple-digit growth for our company.

4. Understand the lifetime value of customers. In my next post, I'll talk about customer lifetime value, and how it impacts your advertising spend. At Stroll, our ad spend is constantly increasing and not capped to a percentage of revenue. That's because we know precisely how much each of our customers will spend with us over time, which lets us invest today with full confidence of our returns tomorrow. David O'Connell, Stroll's Director of Marketing, will dissect the importance of the lifetime value of a customer in an upcoming post.

Focus is vital. And so too is competency. To improve your proficiency and understand of customer acquisition, read one of my favorite books on the topic, "Getting Everything You Can Out of All You've Got" by Jay Abraham. His ideas, as well as those of other marketing strategists, help keep me sharp.

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