“So, how do you plan on acquiring customers?”
I’ve been talking to a lot of people about Attach and I’ve heard this question more than a few times, especially as a marketer.
If you’ve ever been in a meeting with potential investors, applied for a startup accelerator, or filled out a business model canvas, you’ve probably come across this question before. Of course everyone wants to know how you’re going to grow, but it’s the wrong question.
What’s the right answer?
Cold emailing? SEO? Content Marketing? You could list out every single channel, describe how you’re going to include viral hooks, work a unique PR angle, but at this point you’re just shooting in the dark.
The only true answer to this question is to confirm that you’ve committed to an agile growth process. Besides, “no plan survives first contact with customers” – Steve Blank.
Your customer acquisition plan should evolve as you grow. In fact, it MUST. What works initially might not work later on, and what doesn’t work now might be worth revisiting in the future.
From the book Traction,
“Startup growth happens in spurts. Initially, growth is usually slow.
Then, it spikes as a useful traction channel is unlocked. Eventually it flattens out again as a channel gets saturated and becomes less effective. Then, you unlock another strategy and you get another spike.”
This means your plan must be dynamic, and to do that you must develop a process that will continue to move you forward.
Therefore, the question should be: “have you defined a process to acquire customers?”
Growth vs Growth Hacks
When you first venture into customer acquisition, you probably start off by trying random tactics.
You run a Facebook Ad here, write a blog post there, or try the latest growth hack you read about.
After experimenting with a few of these ideas you realize you’re probably not making much of an impact. You can’t randomly try different tactics and expect up-and-to-the-right success, you need a strategy behind them.
So you put together a plan of attack, and you start organizing your efforts into a spreadsheet and track your metrics.
After running with this for a while, you realize it’s extremely hard to continuously improve upon your efforts. You just ran a Facebook Ad campaign for 2 weeks… now what do I do?
Only then do you realize you need a goal driven process behind it. Once you understand that, it all starts to make sense.
Once you establish your goals,
you create a process / system to work within,
then you fill it with strategy / ideas to align with your goals,
lastly, you’ll break those down into specific tactics to execute…
…and not the other way around.
Tactics aren’t sustainable, their effects will always tail off. A process is sustainable and continuous – as long as you are committed to it.
‘Growth Hacks’ are strategy and tactics. ‘Growth’ is a process.
So here’s how to avoid those mistakes and create a customer acquisition plan to grow your startup.
How to create your Customer Acquisition Plan
A good customer acquisition plan starts with some important prep work: define your ideal customer, your goals, your customer acquisition funnel, and your metrics. From there, you create your own growth process from which to fill out and implement your plan.
1. Define your ideal customer
Everything starts with identifying your ideal customer profile. From finding who they are and how to reach them, to how to talk and sell to them.
Attracting the right type of customers makes everything else that much easier, so figure out what ‘right’ means for you. Lincoln Murphy has put together a comprehensive framework to create your ideal customer profile.
2. Define your goals
Goals shape everything from your strategies, to your tactics and daily focus.
From the book Full-Scale,
“Determine goals, milestones and priorities. These three tasks make people more productive. Productivity makes better use of your time. Time is directly related to growth. Growth is why we’re here. Therefore, growth is goals, milestones and priorities.”
Your goals might be monetary, user count, or activity based goals. We all know about S.M.A.R.T. goals and they definitely apply here, but it’s also important that you only focus on 1 to 2 goals at any given time.
For customer acquisition, your goal might be to get more visitors, convert more visitors into leads, or convert more leads into paying customers.
3. Define your acquisition funnel
Break down the journey your customers must take to pay you. This helps you identify where your funnel might be leaky, and as a result, identify the biggest opportunities for quick wins. If this means drawing out a funnel, then grab a piece of paper and draw it out.
Think of your entire acquisition funnel as lots of smaller funnels.
For example, if you’re planning on running multiple landing pages and you’re sending traffic to them from SEO, content marketing and paid acquisition, each of those channels are their own funnel to be measured individually.
4. Know your metrics
Figuring out your key business metrics is core to the plan.
Without knowing your key metrics, you might know “I need to increase traffic” but you aren’t sure what levels you need to get to. When you do know your metrics, you know what numbers you need to hit, and that guides what strategies you’ll focus on to have the best chance of hitting them.
But if you’re just starting out, chances are you don’t know these numbers, and that’s fine too.
Use external sources as a rule of thumb to aim for. If you’re running a SaaS model, take Groove’s SaaS Conversion Survey results on key metrics from 1500 responses as a benchmark:
The awesome Ad Spend Calculator is a free tool that helps you figure out your business metrics by working backwards from your average revenue per user and churn rate:
It also tells you how much you can afford to spend to acquire a new customer. So once you start implementing campaigns, you’ll know fairly quickly whether something is worth pursuing or not.
Gary Gaspar put together a simple spreadsheet for SaaS that you can plug your numbers into and play around with:
Happy Bootstrapper put together a MRR projection spreadsheet for SaaS here.
For a more comprehensive spreadsheet, check out this KPI Dashboard for early stage SaaS startups by Christoph Janz.
Using the spreadsheet example above, you can see exactly how you can reach a goal of $5k MRR in 6 months.
These examples are specifically for SaaS businesses. If you’re running another model you’ll have to change the spreadsheet accordingly but the same principles apply.
The goal here is to develop a hypothesis to start with and work from.
Comparing yourself to others isn’t usually that valuable and establishing your own baseline quickly is key. But using benchmarks gives you a rough idea of what to aim for in the meantime.
5. Track (almost) everything from day one
The best customer acquisition plans have measurement strategies organized in advance.
Most startups don’t begin this process early enough, and they pay for it later.
Even if you don’t use the data right away, it will become invaluable when you have the time to dig into it, or start new campaigns in the future and want to see if they have an impact.
It doesn’t matter if you use a paid analytics tool, Google Analytics, or a simple acquisition channel spreadsheet – what matters the most is that you start to build the history as early as possible.
How do you know what you need to track? While you can measure just about anything, it’s not a good idea to measure everything:
- Begin with your goals in mind: prioritize when and what to measure based on the answers you need to make decisions that will help you grow.
- Measure against your sales funnel: make sure you’re tracking all the steps in your funnel. The AARRR metrics should be tracked at a minimum.
- Track to validate experiments: before you run any marketing campaign, be sure you know exactly how you will measure your success and track those metrics before you start.
Segment have put together a best practice tracking plan that I recommend following.
Reverse engineer your growth
Now that you know your goals and your metrics, you can combine these with the growth process to complete your plan. Whilst there are a few ways people run their growth process, the underlying ideas are the same and generally follow these steps:
Using your longer-term goals and your current metrics, you can reverse engineer them to figure out where you should focus your efforts. Look for bottlenecks in your metrics: is your visitor to trial rate low? Is your churn rate high? Do you need to drive traffic?
If you want to improve a certain metric, figure out what part of your sales funnel will most impact that metric. Then brainstorm on that area with ideas to test, there could be a million ways to improve it.
Start by asking questions: To reach our goal, what do we need to improve right now? How can we improve it? If your traffic is low, focus on tactics that will increase visitors. If your visit to free account rate is low, focus on tactics that will improve signups.
This is how you generate tactics to execute on. But this time, these tactics are no longer random, they are specific, implement with purpose to drive progress towards your high-level goals and milestones.
1. Create your growth ideas list
List out any ideas you have to increase your metrics at each stage of the funnel. These could be tactics you read or hear about, tactics you see that successfully work for others, or ideas you brainstorm yourself. This is your dumping ground for any possible tactic you think might work for your business. These are your strategies / ideas to implement.
Tactics are the specific ways you’re going to execute on your strategy.
Your strategy might be to run Facebook Ads, but you tactic might be to:
Use custom audiences, optimize for click-throughs, advertise against top of funnel blog-posts, or advertise an upcoming webinar. These are all derived from a specific strategy and goal, which are identified through the process.
Pull out these specific tasks and put them into your to-do list.
2. Prioritize your ideas
Especially when starting out, you want to do a million things RIGHT NOW. You’ll eventually want to see all your metrics improve, but you should work on improving 1 metric at a time.
I can’t stress how important this is. When you spread yourself too thin you’ll never take the time to focus on your task and you’ll do everything with half a brain. You’ll become stressed and demotivated because you won’t see results.
Pick one tactic to execute, send it through the funnel and see it through to the end.
Which ones do you focus on?
Play to your strengths to get the ball rolling. If you know you can create great content, focus on that to start. It takes time to learn the ropes on a new channel (let alone be effective), so get the quick wins first before trying channels you have little to no experience in.
Your bottlenecks help you to determine how to spend your time. If your immediate goal is to increase website traffic, then focusing on email marketing isn’t going to bring in more traffic as well as other channels can.
Look at how much of an impact it might have, how confident you are that will happen, and how many resources it takes to experiment with it. Compare it against other experiments that are on the list.
This is how you use your longer-term goals to work backwards to figure out exactly what you need to do today to reach them.
How long do you plan your experiments for?
Brian Balfour, VP of Growth at Hubspot recommends 30 to 90 day experiment cycles:
“Anything smaller than 30 days you’re probably not giving yourself enough time to make a meaningful impact, anything larger than 90 days you’re probably biting off too big of a piece.”
As a rule of thumb, start with once a month. This should be enough time to implement an idea, test it out and see if you have a chance of making it work. The first time you try something it’s likely to fail, so any signs of success should be seen as validation to keep at it.
3. Execute your plan
This part of the plan is where you implement your specific tactics.
The first time you test a new idea in a channel, it’s unlikely that you’re going to achieve a big impact. It’s okay to run a campaign where the primary goal is to learn whether something works. Aim for small victories quickly to establish momentum.
4. Analyze: how to stand apart from the majority of marketers
The most important part of the process is analyzing the results of your campaigns against your hypothesis, pulling out learnings, and turning those into action items, or new experiments. The results of your previous experiments will guide the next cycle of marketing, based on your learnings.
This is the crucial part of the process that most marketers fail to execute and stick to.
At the end of any experiment you have to go back and ask yourself: “Was this experiment successful? If so why? If not, why not? What have we learnt and what can we do differently next time?”
Take these learnings, funnel them back into the plan as new ideas for the next cycle.
5. Optimize & formalize your methods
A well defined process comes from well-defined methods.
Whenever you run a marketing experiment, document your efforts. Outline your objective, hypothesis, timeframe, and how you’ll execute it. After the experiment is over, return to the document and include your results, your learnings, and what you’ll do next.
If you’re doing something that is likely to be repeated in the future, write out a playbook for it that can be referred to next time.
Store all details of your efforts in a shared Google Drive folder. This level of documentation is not something you typically think about when it comes to startups, but it’s critical to keep a record for reviewing your progress and making continuous improvements.
In the same vein, create a dashboard.
Whatever goals you’re focusing on, create a simple dashboard that helps you visualize the metrics you need to improve. This can be in a Google Analytics dashboard, or a tool like Geckoboard.
Dashboards helps you avoid floundering, and focus on what matters.
Timeframe is important. You need smaller timeframes to see if your actions are having direct impact, and longer timeframes to see trends.
For example, if your goal is to improve the number of signups, you might want to add: number of signups per day, week, month or over six months, and also top signup sources.
Bookmark it in your browser or have it as your home tab, and look at it every day.
Pace your customer acquisition plan with product dev
As a startup, the majority of your time should be spent on customer acquisition and product development – the things that will move you forward.
However, you want to be able to make sure that your customer acquisition plan is not so far ahead of your product development, or so far behind your product development, that it throws your entire business out of whack.
If you’re not careful it’s easy to spend more time working on one while the other one suffers.
For example, if your marketing gets too far ahead of your product you can start driving too many leads. But, because the product isn’t up to scratch they’ll all churn out and your efforts will be wasted.
Likewise, if you spend too much time on product development, you won’t have enough customers to bring in money to pay for the development resources, so you risk dying out from lack of revenue. Or you don’t have enough customers to give you feedback on it and you’ll end up building in a vacuum.
A customer acquisition plan will give you the best chance of reaching your goals. But the plan is just the beginning. Ability to analyze, execute, and continuously iterate on your plan will set apart the startups who grow from the ones who don’t.