3 MIN READ | July 17 2020, 12:21:09
4 factors separating the top marketers from the rest of the pack
Rokt CEO, Bruce Buchanan, recently wrote an article for Harvard Business Review around optimizing digital customer acquisition. In it, he outlines four factors to grow your business, reduce customer acquisition costs, and be smarter about your paid marketing campaigns.
We’ve outlined the major takeaways from the article below:
- Marketing spend has been steadily increasing since 1990. This year, 50% of all ad spend is expected to be spent on middle and bottom of the funnel channels.
- Last click attribution is understandably alluring to marketers, as it is easier to measure conversions directly and draw connections between the last action a prospect took and conversions.
- However, though Marketing spend increases, there has been no reductions to Cost per Acquisition, the focus on last-click performance metrics is one of the key reasons why.
- As seen in HBR, Bruce instead recommends focusing on 4 key drivers that result in meaningful improvements to CAC:
- Brand – We see companies with strong brands outperform weaker brands in the same industry by 3:1 in terms of customer acquisition costs (CAC).
- Customer Onboarding – We’ve seen a 10:1 variation in CAC based on friction in onboarding.
- Incremental Approach to Paid Marketing – We have seen clients reduce CAC by 50% through a disciplined and scientific approach to paid marketing using more advanced incremental measurement techniques.
- Organic-to-Paid Marketing Ratio – Leveraging your current (and most loyal) customers can be incredibly effective, we have seen this reduce CAC by as much as 80-90%
- Knowing exactly how effective the marketing efforts are, how much it costs to acquire customers and how this relates to lifetime value is key to competitive advantage, faster growth, and domination of your market.
At Rokt, we help companies acquire new customers at scale, keeping these tactics in mind. Specifically, our Rokt Ads product focuses on Customer Onboarding and an Incremental Approach to Paid Marketing.
Friction during the purchase or onboarding experience has a significant impact on CAC. For anyone who has completed a lengthy application for a credit card from a traditional bank versus an easy sign-up such as for Apple’s new credit card, this is easy to understand. Common mistakes in the onboarding process include trying to shift natural customer behavior, asking unnecessary questions with nice-to-have answers, poor user experience; poor user progression (e.g., asking for information you already have collected), and poor technical integration.
At Rokt, we use the data wisely in order to ensure a frictionless and relevant experience when acquiring customers. Check out this case study – where Rokt helped a beauty company acquire 30K subscribers. Rokt seamlessly integrated client creative on confirmation pages of our premium partner sites. The ad prompted new members to sign up directly from the Rokt platform, attracting targeted new customers. Once customers’ data was captured, a new window opened, driving consumers to the beauty subscription site. A frictionless onboarding experience drives results.
Incremental Approach to Paid Marketing
One of the best ways to improve CAC is to ensure that marketing spend in a given channel is improving outcomes for the overall business – companies should ensure each incremental dollar of spend in a channel is having a positive incremental impact. We have seen clients reduce CAC by 50% through a disciplined and scientific approach to paid marketing using more advanced incremental measurement techniques. The key is to stay focused on your overall business CAC metric and use incremental metrics only when looking at individual channels.
At Rokt, we help our Rokt Ads advertisers measure campaigns using Closed Loop Attribution. Closed-loop attribution is the ability to connect top-of-funnel marketing activities to outcomes that drive business value (e.g., purchases, subscriptions, or application downloads). Whilst top-of-the-funnel metrics offer valuable insights they do not provide a complete, or quantified, picture of the business value generated. To enable generation of greater business value, it is vital to Close the Loop and establish this connection to optimize marketing campaigns.
By connecting relevant brands, offering a frictionless and relevant onboarding experience, and providing closed-loop attribution metrics, we have been helping companies reduce CAC by as much as 80-90%.
If you want to learn more about how Rokt can drive smarter customer acquisition for your company, contact us now or email firstname.lastname@example.org and we will be in touch. You can read the full article on Harvard Business Review.