This post is by Alice Default, Head of Marketing and Growth at Front – a shared inbox for companies and teams. You can get in touch with Alice on Twitter at alice_default.
Recently, I stumbled on customer acquisition expert Brian Balfour’s blog CoElevate and his detailed essay on becoming a customer acquisition expert. I had been digging around the subject to find new ideas to push our growth and that led me to the 97 different links Brian recommends.
I felt overwhelmed at first but quickly decided I had to dive into the vast and complicated subject of customer acquisition to answer all the questions I had including:
What channels should we focus on as a startup?
Where do we start?
And more importantly… how do I know if a channel is working well for us?
I’ve focused on 9 channels that are worth considering and our go-to references that helped us when we got started, and how we’ve experimented with them at Front.
There are only a few scalable channels for acquisition
According to Andrew Chen, scalable customer acquisitions channels are rare. So we researched the 4 scalable channels and the best ways to get started with them:
On the surface, this one is fairly straight forward. The more you pay, the more customers you get, the more money you have to spend advertisement, and so on. If you start looking into guides and articles to learn about paid acquisition, most of them will be about the numbers.
For Example, Ada Chen Rekhi wrote a great piece detailing when paid acquisition will work for your SaaS startup. She explains that your customer’s lifetime value needs to be higher than your cost of acquisition (LTV > CAC), with a recommended ratio of 3:1 LTV:CAC maximum. The thing is, at the beginning it’s highly unlikely you’ll know what your LTV or CAC is, so running the numbers is probably not the best solution. In this case, it’s more about trial and error.
Our go-to reference: A Simple Guide for Setting Up your First Google Adwords Campaign by Amanda Sibley at Hubspot. She’ll take you from building your very first list of keywords to using the different Google Tools to track your campaign and setting up your budget.
Our biggest challenge so far at Front: finding the right keywords for our service (it’s a very wide subject!).
Virality and referrals
Before going down the viral path, realise that your product might not be suited for virality… And that’s ok. Especially if you’re in the SaaS industry, the odds are even thinner as Andrew Chen explains in this SlideShare:
There are usually two categories of products that make it: ones that are inherently social and that involve communication or file-sharing (think Hotmail and Dropbox) or the ones that people get so passionate about that they’ll naturally talk about them and share them (think Slack, who has – almost – grown without any marketing, and only on the back of word of mouth). If you’re in one (or both) of the categories then good news, you can use your active users as actual channels of acquisition.
Our go-to references: the beginning of Mattan Griffel’s SlideShare on growth hacking where he goes over the first steps of Hotmail towards finding their growth channel (the rest of the presentation is also great!). Also have a look at the Zero to a Million Users SlideShare by Drew Houston (co-founder of Dropbox) and Adam Smith (co-founder of Xobni) themselves as they go back on how they made it as easy as possible for people to invite their friends to use their products, using referrals to get the word out about their services.
Our biggest challenge so far at Front: A couple of weeks ago we built a referral program and sent out personalized coupons to all of our customers. We found out that it was difficult to track if people were sharing the code around via email. Now we just need to wait for the end of the trial period to see if the program worked out!
Let’s say you’re able to create a lot of content. It can be landing pages, articles, reviews… creating a lot of unique pages in the process. If you’re able to optimize these pages, you’ll have the potential of attracting millions of new users who are searching for content.
Our go-to reference: Moz, the software who – almost – reinvented SEO, pulled together a great guide (plan a few hours to read it all!) on the subject. They write about how SEO works and the best ways to track and measure your success. Or if you want to get to the basics straight away, refer to Google’s own Search Engine Optimization Starter Guide.
Don’t kid yourself, sales always starts as a very manual and unscalable process. You’ll pitch and demo each and everyone of your first customers until you’ve found the perfect way to do it. However, you’ll soon want to build a repeatable and profitable sales process. It might be easy to demo and get people onboard when you have 50 signups a month (and it’s definitely in the philosophy of doing things that don’t scale). But it definitely gets complicated once you reach hundreds or thousands of new leads per month.
Our go-to references: Christoph Janz from Point Nine Capital wrote about how to build your sales process depending on what stage you’re at. A great resource to learn when to scale and how to do it. Also, Steli Efti, co-founder of Close.io, created a startup sales success course that’s definitely worth reading if you’re looking for actionable advice.
But these are not the only channels to consider
These 4 channels might not suit your business. Maybe your LTV:CAC ratio is not good enough for paid acquisition, maybe it’s hard to get people to share your product or maybe you don’t have enough content yet to implement a real SEO strategy.
Each startup is different and it’s important that you try different customer acquisition channels to find the one/s that are right for your business before finding those that are just right for you. Brian Balfour recommends that you have 2 channels that you’re good at. And to find those two, you need to try them all.
Here are 5 other customer acquisition channels that are worth testing:
As Gregory Ciotti puts it in his not-so-brief guide to better content marketing, content marketing is the best way for people to know you, like you and trust you. Even though there’s a great chance your content marketing strategy will fail, says Rand Fishkin from Moz. But if you write things that people actually want to read and you’re able to distribute it well, you’ll earn a loyal audience for life, knocking down sales resistance for potential users.
Our go-to references: Gregory Ciotti’s guide is definitely a great place to start as he goes over the tools you should use as well as how to lay down your content strategy. Kissmetric also wrote extensively on the subject and their guide to content marketing is a great source to know how to get more out of your content marketing efforts.
Front’s take on content marketing: We started using this channel very early, when we were still in beta. Since we’ve launched 2 months ago, content marketing has brought us back 21% of our signups. We found out that taking time to write higher quality articles less often was actually a better technique for us than writing a lot of quick articles. Our biggest challenge today is now to optimize our distribution channels and keep building our own (newsletter, social media accounts).
A new look at PR
Buffer is well-known for it’s strong social media and content strategy and this channel has definitely been working out great for them. But there is another channel they have taken advantage of with great success: PR.
Why do PR in the first place? Because it will help your startup get attention above and beyond your small inner circle. It will enable you to talk to a wider audience and get your product in front of people that you would have probably never reached otherwise, getting yourself new signups at the same time.
And when you do it right, it’s not as time-consuming and difficult to get as you may think. The trick is just to adopt the right approach.
Leo Widrich, co-founder of Buffer, wrote a very extensive guide how to get media coverage as a startup. According to him, the trick is knowing how to tell great stories, getting to know the writers you want to work with, following up after you’ve been published and more importantly, making getting covered a habit.
That last point may seem difficult but you’ll find out that you have a lot more stories to share than what you think: every new feature release, every new partnership and every new milestone are opportunities for you to reach out to the press and ask for coverage.
Front’s take on PR: We followed Leo’s guide and it worked out well! In the two months since our launch, we got 10 different press coverage or guest posts on huge websites like TechCrunch, LifeHacker, The Next Web and even the Wall Street Journal! These articles brought us back around 46% of our signups over the last 2 months.
Partnerships can make or break companies, and especially startups who rely too much on them. However, when you know how to handle them, they can be a great source of new leads. Joseph Walla, from HelloSign, explains just this in his talk at the unSexy Conf 2013, as he goes over the mistakes they made and the successes they had, like their integration in Gmail for example.
One thing we took out of his talk is that not all products are suited for partnerships and that not all partnerships can be good for your product. What matters most before everything else is that you actually have a product that has achieved product/market fit and that is already selling by itself without having to rely on any partnerships. Once you have this, then you’ll be able to evaluate opportunities, prioritize them and choose the right partners.
Our go-to reference: We highly recommend Brian Balfour’s great essay on growing via partnerships. He goes over how he took his startup Viximo from 0 to millions of daily users through partnerships. His advice goes from picking the right time to growing via partnerships to the way to evaluate your partner and closing the deal.
In this section, we won’t talk about how to share your content on social medias as this should be part of our content strategy. Here we’ll look at how you can turn social media in a customer acquisition channel in itself.
How do you do it? This is mainly about building and maintaining relationships to improve the traditional customer acquisition processes. You can start on Twitter by building influencers list or attending Twitter chats. On Linkedin, you can build your channel via your company’s page, a group or influencers’ outreach.
Our go-to reference: Shanelle Mullin, director of marketing at Onboardly, wrote a great guide on the Kissmetrics blog on how to master social customer acquisition. She explains that the most important thing when acquiring customers through social networks is to not let yourself be impressed by good sharing rates or high number of likes. What matters in the end are the new customers you are going to acquire. So you need to make sure that you identify the right metrics and track them right.
Social acquisition at Front: During our beta, we used twitter to find beta testers. This brought us 15 new qualified subscribers to join our beta each week (we wrote a detailed step-by-step guide on how you can do this yourself).
40% of B2B marketers rated the leads generated by email marketing as high quality. (Source: Software Advice Survey). How is this possible? Because more often than not (and we hope it’s the case for you), the people on your mailing have chosen to be there and it means that they will be more responsive to all the content you send them. Chris Hexton, co-founder of the email marketing platform Vero, shared his tips on the Sixteen Ventures blog on how he increased his conversions through email marketing by 450%. His secrets? Segmentation, targeting and automation.
Our go-to reference: A reference in the field is also Copyblogger who wrote the Email Marketing Essentials: How to Push Send and Grow your Business. They go in depth on why you want to get inside the personal inboxes of your potential customers to deepen the relationship you have with them and generate high quality leads!
Early adopter advantage
The truth is, it doesn’t stop here. Firstly, because all of the channels I’ve mentioned will keep evolving and changing their rules, pushing us to constantly re-learn what we thought we knew. But most importantly because new channels keep emerging all the time.
Just like Facebook and Twitter were new emerging channels a few years ago, Instagram, Snapchat, Whatsapp, and mobile apps in general are becoming channels of acquisition for companies. Engineer marketing (like tool-building) is also starting to grow as a channel, as well as events or non-regular PR.
Choosing these channels to push your growth is definitely taking a bigger risk than choosing any other “classic” channel. But if you bet on the right ones, it might pay off in the end, especially if the channel takes off and you’re one of the early adopters.
What should you take out of all this in the end?
Don’t be afraid to take a chance and experiment with channels, old ones or new ones. We’re all looking for the perfect “growth mix” but the recipe is nowhere out there. We all need to figure it out for ourselves. Keep an eye out for new potential channels that have a strong alignment with your target market or niche. Who knows where the next one might pop out from?
Afterword: Tracking your customer acquisition channels to find out what works
Ryan here again…
So now you’ve picked a few channels to experiment with and started running a few campaigns.
But that’s just the start. You need to track your channels, analyze the results and find out what you should double down on, and what you should leave behind.
How do you know which channels are the most effective for you? With so many campaigns and so many channel options, it’s hard to keep track of all your marketing efforts – let alone measure the results effectively.
To figure this out, you have to ask two questions:
- Which channels are the cheapest to acquire a new customer?
- Which channel attracts the most successful customers?
Your most valuable channel will be the one that brings you the cheapest users who are most likely to succeed. If this was to be plotted on a graph, you want customers from the top right:
Enter the channel tracking spreadsheet
Manuel Weiss is the Marketing Director at Codeship. After hearing on Rocketship.fm that he carefully tracks his conversions across 70 channels I had to reach out and ask how he manages this, and he was nice enough to give me the details (check out more of his writing on the Codeship Blog, particularly this post on Creating Repeatable, Measurable Marketing Building Blocks).
Here’s the simple process he uses to find out what channels work for Codeship:
- Use Google Analytics, Kiss Metrics or Mixpanel to track where people are coming from when they hit your homepage or landing pages
- Use Mixpanel or KissMetrics to see how these people behave after they hit your site and signup. Do they perform enough of a core activity to fall into the ‘active customers’ segment? Do they become paying customers?
- Put all those numbers into a simple spreadsheet that captures unique visitors, signups, active users, paying customers, and the campaign cost – for each channel.
For example, your spreadsheet might look like this:
In this example, the most amount of visitors come from Twitter (300), then Perfect Audience(200), and lastly from referrals (100). The number of people who signup is equal across all 3 (25 each).
But lets keep breaking this down. This is the important step that most people seem to neglect.
The number of active users (users who have completed a certain predefined threshold of events) is highest for referrals (25) and lowest for Twitter (5).
Finally, most of the paying customers come from referrals.
Now you know that a signup that comes from referrals is 3x more likely to become a paying customer then Perfect Audience, and 7.5x more likely to become a paying customer than Twitter. Now you know to focus your efforts on getting more unique visitors from referrals.
If you only keep track of the first 2 metrics you could mistakenly think all your channels bring in the same amount of customers.
Measure these results against your average spend per customer and customer lifetime value.
If you’d like to start using this to track your own channels, I’ve put together a copy of the spreadsheet with formulas for you to plug in your data: