The Sales funnel series – No1. Acquisition
The Sales funnel series – No1. Acquisition is the first of the series, attempting to examine all 5 stages of the sales funnel framework, separately, and stimulating with references and case studies business owners and marketers, how these apply in business making, no matter the company size or the industry. Borrow My Brain opens-up to guest authors and the Sales funnel series is the creation of Despina Exadaktyloy, which we welcome in our space. Despina is an experienced digital marketer with a focus on Inbound and Growth marketing
The Sales funnel series – No1. Acquisition
Originally introduced by Dave McClure the AARRR framework – or in other words, the 5 Pirate metrics – was originally used for establishing business processes around startups by defining the basic stages of their customer’s lifecycle. Now, however, has ended up being applicable for established businesses too.
Analytically its stages include:
- Acquisition: The stage which users find you
- Activation: When users have the 1st experience with your product and/or service
- Retention: The stage which your user becomes a faithful customer
- Referral: When users refer to your product
- Revenue: The amount of profit you turn up with.
This post series will attempt to examine all 5 stages of the framework separately by breaking them down and analyzing how each one of them applies to your growth strategy.
The 1st metric, acquisition, constitutes all the top of the funnel activities used to attract your target audience to try or buy your product and/or service. Its definition as it is provided by Dave Mclure is plain and simple: Users come to your site from various channels. It doesn’t stand only for that though. It also refers to the users’ first impression and subscription rate.
As Pierre Lechelle points out correctly in his article: “To ensure that customers go through the funnel stages (to Revenue), you have to make sure that there are enough customers at the top of the funnel. Without those customers, there will be no customers at the end.”
The acquisition channels in question are many. The ones that you have to use to better attract qualified leads that will eventually convert – no matter the outcome you get from what you define as conversion – is something under consideration for each product. The only optimal solution to finding the channels that suit your business best is- and please mark my word here with caution – experimentation, experimentation and experimentation.
Less is more does not apply here. You will- best case scenario- find a few channels that will pave the way to your leads to discover your product’s magic.
But don’t just take my word for it. Brian Dalfur VP of Growth at Hubspot supports in his article What Blackjack Strategy Teaches Us About Growth the exact same thing, “A common counter-argument is that diversification of marketing channels is needed to build a really successful company because it reduces risk. The exact opposite is true… diversifying lowers your chance of succeeding and therefore increases your risk. Your biggest risk isn’t finding multiple channels that work. Your biggest risk of not finding a single channel that works.“
It would be wise to have in mind that the spending on any of those channels constitutes your acquisition cost. The more you spend on them the bigger it becomes. So, unless you think that a single user will be able to overcome that cost and you are 100% sure you will retain him until he does, try to optimize only those channels that bring you the best ROI. More on this topic though later.
The logic you should follow
Simply put the logic you have to follow as Dave Mclure indicates below is:
- To find the channels and personas you should market your product
- Test any possible channel to find those that click for you
- Measure every step of your funnel
- Give emphasis equally to channels segmentation and what kind of customers you acquire.
In an overview the acquisition channels are the following:
Hectic right? We are talking about fourteen different types of acquisition channels. You don’t need to be a newbie here to feel overwhelmed. Even marketers feel lost when it comes to designing a strategy from scratch. So what do you do? How do you begin? Besides taking all of them one by one and start experimenting that is.
We could dedicate chapters on this issue and it would still be uncovered. Selecting the ideal acquisition techniques differs dramatically per case. For example, you can use the same techniques for a SaaS and an e-commerce brand but their approach would have nothing in common. The first one wants to acquire businesses and the second consumers. Totally different personas.
Before move on it would be wise have a good look at some statistics from Hubspot’s State of inbound that give major insights on lead generation:
- Demand Generation: 80% of marketers report their lead generation efforts are only slightly or somewhat effective. (BrightTALK, 2015) (Source: https://www.hubspot.com/marketing-statistics)
- Marketing Analytics: 59% of marketers rely on total lead volume as a top metric (BrightTALK, 2015) (Source: https://www.hubspot.com/marketing-statistics)
- Marketing Automation: B2B marketers say the #1 benefit of marketing automation is the ability to generate more and better leads. (Pepper Global, 2014) (Source: https://www.hubspot.com/marketing-statistics)
Successful channels as indicated below-among others- have proved to be referrals, email marketing, search marketing and live sales visits.
While at the same time B2B marketers claim that their biggest priorities are understanding the customer journey (78%), mapping the right content to the right buyer journey stage (77%), and attributing and measuring performance across channels (53%).
Case study: Wistia
The example of Wistia might be a very good case to consider here as its acquisition technique was based on the customer journey. For those that are not familiar with what it does, Wistia is a leading video platform for every type of business with over 300,000 customers across all different industries. So its acquisition strategy is definitely one of the most important points of reference to its success.
As with most SaaS Wistia too had to optimize the process of converting free accounts to paid. So, Andrew Capland – now the Director of Growth at Wistia- decided to go from increasing signups to increasing the right kind of signups. The strategy selected was to escalate its users Wistia focused on one thing and one thing only. Data and email marketing strategy. Step by step the strategy followed was the one below:
- Segmentation of free accounts to understand which ones are more likely to be turned into paid.
- Tracking differently the accounts that had the
indicators of becoming paid.
- Weekly reporting to better predict revenue.
- A/B testing on their website based on their new goals.
- Realized user research- by asking existing clientele- to get data and information about how they should change their email marketing flows.
- Enriched signups using third-party data to learn more about their users and customize their email approach
The golden nugget: Wistia used one of the most effective – yet difficult to optimize- acquisition techniques. Email marketing. It redefined its onboarding by taking into account the only thing that every organization should consider, data and most importantly user data.
Don’t find customers for your products, find products for your customers.
Know your audience/Persona Analysis
The main reason your marketing practices fail is that there are not being directed to the customer segment they should. That counts especially if you are a startup and you don’t have the budget or the resources- an established company would have- to invest in paid advertising too.
That’s pretty much how the need to create your persona is being born. A buyer persona is the visualization of your ideal customer and one of the most important factors, determining your acquisition channels.
In the case now, you fail to develop the right persona it will be only a matter of time until the following consequences arise:
- You will focus on the wrong acquisition channels
- You will not give the required product information to your prospective customers.
- You will target the wrong audience
- If you manage to build an emailing list it will include subscribers with no interest at all to what you offer them.
Basic characteristics that your persona should have are:
- Professional orientation
- Basic Demographics
- Goals and challenges that concern it
- Personal values & interests
The information you have to gather to make this happen is a lot and in order for you not to feel lost in the woods you need to follow very specific steps:
- First things first, you should give special emphasis to your website analytics and create regular reports related to customer behaviour.
- Secondly, you should consider involving in the process all the team members that engage with your customers. Only, in that way, you will manage to gather all the necessary info about your customer’s behaviour.
- Conduct extensive competition research on social media to see its audience’s patterns
- Ask your customer anything you need to know about him directly. This can be done either by just giving him a questionnaire or in by having your customer success arrange calls or personal meetings to further discuss the issue.
Bonus: You can find a number of sample templates here
Customer Acquisition Costs
Now that we have been over the basics is time to take it up a notch and take a look at cost acquisition- the usual pain for any product owner. The formula behind your CAC is simple.
Please make a note here that the marketing and sales costs do not include only the budget spend on paid advertising. It also includes the proportion of your budget spend for any kind of marketing and sales tool.
Moreover, you should always remember that there is no one-size-fits-all customer acquisition cost benchmark. It is always a paramount factor in the business model you follow and dependable on the ratio of your CAC and your customer lifetime value (LTV).
Ways to reduce your CAC may be- but are not limited to- the following:
- Increase conversion rates: By conducting the necessary A/B testing to your campaigns
- Adopting a marketing automation s/w: to automate basic procedures (eg. onboarding) and reduce the need for human manpower
- Optimize your buyer persona: to create the most targeted campaigns you possibly can.
- Invest in SEO: to have better organic results over time and thus reducing your spend on paid advertising.
Wrapping it up
All in all, the acquisition will always be a topic to revisit and optimize over time. The channels you have at your disposal to exploit are more than enough and they constantly evolve. So, the solution here does not lie in a strategy that you craft and forget about it. You should constantly experiment new techniques and optimize your already selected channels, in order for your brand to be able to make the difference – by taking into consideration the evolution of your product and your audience’s needs at the same time.