On Friday my partners and I hosted in our office in
- Being best in class on customer acquisition implies combining the right people, an efficient process, and best in class tools. The process typically being used involves: creating a control group, hypothesizing a particular behavior of this group that will be capitalized during the marketing campaign, testing the hypothesis on the desired customer touch points (email, search, display, affiliates, etc.), analyzing the test results, learning from the analysis and optimizing, forming a new hypothesis, repeating. As one of the participating CEOs mentioned “every minute, some aspect of a customer acquisition campaign is being optimized.”
- Social media is becoming an increasingly important channel for generating interest in a category but once a company starts promoting their particular brand through the social channel, user engagement appears to drop. Word of mouth is important but it has not yet been integrated effectively with social media. This is an area that holds great promise and where the participating companies will be investing over the next 12 months.
- Test and measure every parameter that goes into customer acquisition. Best in class companies can manage very complex test matrices. It is important to be able to quickly hypothesize and test offers, creative, etc.
- The right analytics around the data being collected define best in class companies with the lowest customer acquisition and retention numbers. Our portfolio companies, by constantly sharing best practices, have moved beyond measuring the effectiveness of customer acquisition campaigns in terms of clicks, and impressions, i.e., website analytics. Instead they are now measuring the impact of each customer interaction on a particular outcome.
- While companies are investing heavily on improving the quality and the uses of the data they capture through their customer interactions, they were less definitive about the impact of data they purchase from data exchanges.
- A good off-the-shelf software platform for direct response/branded response doesn’t exist (investment opportunity?). The portfolio companies have created such platforms by manually integrating stand-alone applications. As a result, the operational complexity of working with multiple applications rather than a single platform presents a big challenge for marketers. Good direct response software platforms can be used not only to improve the effectiveness of customer acquisition and customer retention of existing products, but they can also be used to effectively test the likely success of new products before introducing them to the market.
- Success with online channels is leading our ecommerce companies to start experimenting with offline channels such as Direct Response TV. Every test associated with an online customer acquisition campaign can become a leading indicating for the effectiveness of a corresponding offline campaign.
- The companies are being proactive about data privacy issues. They are using services, including legal services, on how to best safeguard and use the data they collect and what to include in the creative they test for customer acquisition.
- Metrics on how to calculate lifetime value per customer are still evolving.
Not only were the executives able to share best practices and share ideas about how to improve the operations of their respective companies, but after the meeting ended several stayed behind working on business deals between their companies. A great way to end the week!