customer acquisition and_retention_strategy_v10_kd

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1

Customer Acquisition and Retention StrategyAndy [email protected]


Challenges Quantifying customer behavior and tying it

to ROI


| Customer Acquisition and Retention Strategy

Consumer AB Test Performance3

Very Poor Poor Neutral Good Very Good0

12.5

25

37.5

50

0%

70%

5% 7%14%

18%

Conversation Rate Lift Performance

(≤5%) (-5% to -1%) (-1% to -1%) (1% to 5%) (>5%)

The majority of ideas are neutral

or negative

Perc

enta

ge o

f To

tal Te

sts

56%

7%5%

A histogram of all the tests performed by the consumer optimization team reveals that the vast majority of ideas proposed to improve the site were either neutral or had a negative impact on conversion.



Defining an evaluation framework4

88%The majority of people who indicated some interest in mobile devices never found a product or category page.

Fallout from Awareness to Consideration



Pepsi had a similar problem

5

Making small incremental changes can result in a big impact on conversion

CONTROL

100%

TEST

What looks best is not necessarily what’s most effective in achieving business.

Increase in conversion rate


The FrameworkAB testing is a tactic. We need a way to

evaluate why and how it is to be deployed


| Customer Acquisition and Retention Strategy7

Business ObjectivesGrow Revenue• Customer acquisition• Frequency of purchase• Increase basket size

Reduce Costs• Reduce customer acquisition

cost• Loyalty / return engagement• Advocacy / referral

First Step: Define Business Objectives

Strategy• Return engagement • Content messaging• Learn / test / implement

Tactics• AB testing • Segmentation – learn• RFM analytics• Promote • Gamification

Next, develop a strategy to achieve business objectives. Then use tactics to implement the strategy.



AwarenessRetargeting, email, search, display…

Consideration• Landing pages • Product category pages• Content based algorithms

Purchase Intent• Shopping cart• Collaborative based

Loyalty• Post checkout • Email reminders

At Samsung we learned the that primary variable for predicting purchase intent was contract renewal.

We could then target the right customer with the right message at the right time.

Each step in the customer journey will have specific triggers that will drive customer behavior.

Samsung Shopper Marketing Journey Map

Purchase• Shopping cart

Learn

Buy

Get


Measuring SuccessIf you don’t know where you’ve been,

how do you know where to go?



http://techcrunch.com/10/29/how-to-measure-the-true-stickiness-and-success-of-a-facebook-app/

The primary predicator of future revenue growth is return engagement.A pillar of any sales strategy. WIIF

M



11

Appropriate measurement will help influence the optimal strategy.

Product Value Messaging Strategy

Promotional Pricing Strategy

Engagement

Sale

s

For Pizza Hut we were able to regress engagement with respect to sales and prove that a product messaging strategy was superior to coupons.


Putting it all togetherImplementing the Framework:

Tactics and Tools



How to implement a strategy: Target & tailor communication to customers:

identify need and problemVirtuous Cycle: Learn, Test, Implement, an iterative Agile Framework

Learn, Test, Implement are the tactics: This is how you develop, test, and refine strategy.

Short iterative cycles mitigate risk. These tactics are used to make process more efficient. Ultimately, you build a better product.



CUSTOMER ACQUISITION COST < Lifetime ValueCreating a strategy requires a process of discovery to find the correct balance.

CAC < 1$

LTV > 1.10$

10 mil

DAUDaily active users



COST PER CHANNEL / CUSTOMER BOOKING

Paid Search $274

Travel Channel $441

Email $12

Organic $7

Affiliate $193

Display $625

Social $-

Total CAC $177

Paid Search

Travel Channel

Email

Organic

Affiliate

Display

Social

Total CAC

CUSTOMER ACQUISITION COST by CHANNELClick-based attribution model reveals CAC for display is greater then $600 with a LTV of half that. We are loosing money for every new customer.

EXAMPLE

Optimize display ads and lower the cost through testing and ideation

The example comes from an online travel agent



FUTURE CALL CENTER LTV

LAST YEAR 2013 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

% Will Repeat Next Year 20% 15% 12% 10% 9%Call Center Cost Per Transaction $50 Average Revenue / Transaction = $2,519 $491 $388 $290 $251 $221 Discount Rate 8%NPV Of Transactions $3,872 Margin 10%LTV Customer $387 % Increase 5%

CUSTOMER LIFETIME VALUE (LTV)CAC for display is $387 which is far less then LTV. We can either increase retention or increase conversion by targeting the right customers with the right content at the right time.

OVERALL INCREASE PROFITABILITY 10%

5% increase in retention = 30% increase in LTVEXAMPLE



Learn your audience.You can not optimize the experience without knowing who you are targeting.



Segment and Survey

Gain a deep understanding of what makes buyers buy…What are the objections that qualified buyers have?Match the pages purpose with what customers want.Variable effecting conversion: • Load time • Design• Content• Concrete and emotional vs. intellectual and abstract• Promotional messaging • More detailed product pages • Personalize • Value proposition

Once you know who your customers are find out what is important to them. How do customers define their needs?



Develop some ideas. Once we have done the initial analysis we are able to create some ideas that can then be tested.

• Know the bottlenecks and opportunities

• Know your customer• Develop some ideas to test

around the needs of these customers



Ideate using AB testing to understand behaviorTest for discovery not just validation A – Control

B – Test

95%visitors

5%visitors

20% conversion

50% conversion

Goal Wireless/home

Wireless/home

AB Engine



The value in A/B testing is learning

This combination saw an increase of 40% in sign-ups that resulted in $60M in incremental

donations.

The Obama campaign used simple multi-variant testing on their donor pages which tested many different images, CTAs, and headlines.



Goal is to create alignment internallyMarketing efforts are currently not consistent with landing page content.

Marketing needs to be optimized for landing page content through an imperial methodology of testing and discovery.



Engagement = SalesOver time there is a direct correlation between sales and optimal content strategy

Sal

es


What is next? What have we done and what

needs to be done?



Thank You


Archive

Supporting Slides



KEY INSIGHTS

• Seasonal spikes occur in January and August time frame. However, purchasing does occur rear round.

• People are browsing midday during the middle of the week on a work computer, mobile, or tablet device.

• Purchasing is occurring in the evening on home computer presumably after talking to husband or partner.

• Purchase consideration may take 2 weeks to one day. However research and planning may start 2 or more months prior to purchase. (More research required.)

• Consumer skews towards educated females between 25 and 35.

• Customers are looking for:

• Ease of use

• Transparency in pricing

• Product focused messaging around needs of the customer

EXAMPLE

customer acquisition and_retention_strategy_v10_kd

Marketing

att customer acquisition

right customer

customer journey

customer behavior

retention strategy http

retention strategy pepsi

att challenges

sales strategy