Customer Economics: How much can you afford to spend acquiring a customer?

When launching a new startup understanding your customer economics is crucial. At its most basic customer economics means understanding what you can afford to pay to acquire each new customer, and what you can expect each customer to spend with your business. Get your customer economics right and you’re setting up your startup for long term success and profitability, get it wrong and you’re looking at failing very fast indeed.

Customer Acquisition Cost (CAC) is the amount you spend to acquire a customer. Life Time Value (LTV) is the total value that customer will provide to your business. In order to have a profitable business you need to ensure that you’re not spending more to acquire customers that they’ll ever spend with your business. Expressed more simply the golden rule is:

LTV > CAC

Estimating LTV and CAC

So to begin you’ll need to do some calculations to understand what your startup’s LTV and CAC are. To calculate your … Continue reading Customer Economics: How much can you afford to spend acquiring a customer?

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The Few, Not The Many: Segmentation for Start-ups

Traditionally marketing teams can segment their target audience by any number of variables resulting in numerous segments on which to focus their marketing messaging and campaigns. For start-ups the temptation to ‘target’ everyone who could be a potential user can be immense. However when looking at segmentation for an early stage start-up the key is to focus on the few, not the many.

Fewer is faster and better

Given tight resources and fierce competition generally start-ups need to focus on one key segment and win it. By targeting just one segment you can better focus your product, messaging and marketing strategy on the needs of that segment, giving yourself a better chance of success. In addition by concentrating on just one segment you have a better chance of reaching product-market fit faster as you’ll be really focused on solving the problems of just one core group of users.

If groups require different distribution channels, relationships, offers or pricing they are … Continue reading The Few, Not The Many: Segmentation for Start-ups

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Startup Pricing: How to Research & Choose the Right Price

Pricing is one of the toughest decisions for many startup founders. Often it feels like complete guesswork but it doesn’t have to be this way. There is a systematic way to choose a price and in this post I’m going to show you how to choose the right price to maximise profits for your startup.

First of all let’s look at why pricing is so important. Your price, and revenue model, are an essential part of your business and have a huge impact on how only your profitability and funding requirements, but also on your marketing decisions and ability to acquire customers cost effectively, or at all. Price can also serve as an obstacle to buy and plan a major emotional, as well as rational, role in buying decisions. For example if pricing is too complex it can be barrier and if a product or service is free people can wonder what’s the catch (to this day I’m still asked … Continue reading Startup Pricing: How to Research & Choose the Right Price

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All does not end with Acquisition, Focusing on Conversion

It always amazes me how much time, effort and budget is spent by startups on getting more visitors to their websites. And then what. For the vast majority the job it seems is done. When in fact the job is only just beginning. Letting people know you exist and encouraging them to visit your website is only the first step in the process. Next you need to engage and encourage them to do something, take some action, register, sign-up, maybe even pay!

So what should you be doing and how can you do it? Conversion Rate Optimisation or CRO is the answer but where should you start?

First of all you need to decide what the goal is. What is it that you want new visitors to your website to do? Depending on your product or service this could be to subscribe, pay, start a free trial or register. Decide on your goal and then review your homepage and … Continue reading All does not end with Acquisition, Focusing on Conversion

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Marketing on the App Store

Marketing on the App Store is a bit of a black art at present with Apple playing their cards very close to their chest. In this blog post I’m going to share some tips and tricks that have been successful for me when launching and marketing iPhone apps. Please leave a comment if you have other tips you’d like to share which have worked for you in the past.

Build a great app

Before you can start marketing anything you need to build a compelling product. This is no difference on the App Store, in fact with almost 100,000 applications all vying for attention it becomes even more important to think about what differentiates your product and why people should choose yours over your competitors.

Get the message

Simple, compelling messaging is always important but on the App Store it becomes even more so as your app store listing also drives search results. Unfortunately as you’re not dealing with … Continue reading Marketing on the App Store

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Marketing for start-ups on a shoestring

Today I had the pleasure to present at Launch48 about how to market your start-up on a tight budget (or no budget). If you couldn’t make it you can view my slides here: ‘Startup Marketing on a shoestring‘.

Some of the key points for start-ups to remember when they’re looking at marketing their business and their product are:

Marketing is about understanding your users and building a relationship and an emotional connection with them. Find out what interests your target audience, what they read, who influences them and what problems they have that you can help to solve. Get the basics, including your branding, user journey and metrics, right before you start outreach. Focus on your key differentiators and make your messaging clear and engaging. Tell a story with your messaging and people will be able to tell their friends and share your product easily. Have real users review the user journey and see where the friction is … Continue reading Marketing for start-ups on a shoestring

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Building Viral into Product DNA

Viral or social marketing are the hot topics of the moment. The attraction is obvious, you can spread the word about your product or service to people at a low cost, through trusted channels, namely their friends and family, and get them to pay attention and act upon the referral more easily.

However viral marketing isn’t as easy as it looks. If you truly want to base your marketing on social, viral or word of ‘mouse’ you need your customers to be really engaged with your product, to truly love it and feel the need to tell people about it.

Skype is a great example of a truly viral product. Skype let ‘the whole world talk for free’ but in order for users to call their friends for free they had to tell them about Skype and convince them to visit the website and download it for themselves. That way the user won, … Continue reading Building Viral into Product DNA

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A B Testing: Marketing as Science

Recently I’ve been asked about A/B testing for online marketing and it occurs to me that many marketers spend a vast majority of their time working on new campaigns to drive conversion, acquisition, retention or monetisation and not nearly enough time perfecting existing channels and communications with the more scientific approach of AB testing.

What is AB testing and why is it important?AB testing, also known as split testing, brings some science to the practice of marketing. Essentially AB testing involves making small incremental changes, one at a time, so that you can see what impact these changes will have on conversion, click through rates, sales or other targets. In this way marketers can scientifically prove the impact of specific changes rather than making recommendations based on gut instinct.

Before you start with AB testing you need to consider a number of questions:

What do you want to test and in which medium or channel? How will you track metrics … Continue reading A B Testing: Marketing as Science

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Social Media Marketing’s growing importance

Recently there’s been a lot of talk about the roles new online channels will play, and indeed much derision from some as to the impact Twitter can have as a marketing channel. The release of a number of reports and survey results help to show the growing importance of these social media channels for marketers going forward.

A survey of 18,000 marketers at Online Marketing Blog found that the top ten digital marketing tactics which marketers are planning to use in 2009 are:

Blogging (34%) Twitter (29%) Search engine optimization (28%) Social network participation (Facebook, LinkedIn) (26%) Email marketing (17%) Social media monitoring & outreach (17%) Pay per click (14%) Blogger relations (12%) Video marketing (10%) Social media advertising (7%)

Out of the top ten, six of these can be considered to be social marketing.

At present the top sectors currently engaging in social media include: retail, consumer goods & services, high tech, media & entertainment, automotive, financial services, Government … Continue reading Social Media Marketing’s growing importance

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Skittles becomes social

Skittles have launched a new website, well in fact they’ve launched a lot of links to various web 2.0 and social media sites where their customers are talking about them. The homepage shows various chatter about Skittles on Twitter Search and other navigation links point to their Facebook page, YouTube for Video and Wikipedia for product information.

Skittles parent company, Mars, have essentially handed over control of their homepage to Twitter users, and with updates in real time you can see both positive and negative comments posted. It’s a big step away from the traditional use of websites in FMCG for delivering controlled messages to consumers but a very interesting experiment in social media. The novelty of this move will no doubt generate a lot of press coverage and exposure in blogs and social media for Skittles.

The website launch has certainly got people talking, the Twittersphere is abuzz today with mentions of Skittles (and indeed some nostalgic purchasing of … Continue reading Skittles becomes social

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Facebook for the old and the young

There’s been lots of discussion about the aging of Facebook recently. This doesn’t feel like a new phenomenon to me as quite a few of my own Facebook friends are in fact my aunts and uncles having mastered email and even Skype and now joining Facebook to see what it’s all about, and maybe even see what their kids are up to!

What has struck me recently is that the younger generation have stopped using what we’d see as traditional online communications channels like email. By looking at traffic to Facebook versus email sites we can see the impact already. Younger users don’t have the same need for email now that they have Bebo, Facebook and the likes. My 18 year old cousin has been a big user of social networking for many years, spending an unnatural amount of time glued to Bebo. And her first foray into email just happened recently, out of necessity, as she started college and … Continue reading Facebook for the old and the young

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My Favourite Reads of 2008

It’s amazing how many books you can read when traveling, with all that free time to kill and so 2008 offered me a great chance to catch up on many books I’d been meaning to read for years. Thanks to those 26 hour bus journeys in South America I got through quite a few!

Here’s my pick of the bunch:

Shantaram – A captivating story of life in the slums of Mumbai for an ex-convict who escaped from a high security jail in Australia. The writing really brings Mumbai to life and there is never a dull moment. Be warned you won’t be able to put it down! The Poisonwood Bible – Follows a missionary, his wife and four daughters on their move to Congo in the 1950’s showing how Africa changes their lives forever and how trying to force different cultures to take Western government and cultures doesn’t work. Marching Powder – True story of a British prisoner’s life … Continue reading My Favourite Reads of 2008

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Grazing and long forgotten resolutions

New Years resolutions are hard to keep and coming towards the end of January many of us are already lamenting broken resolutions for yet another year. But at least when it comes to eating more healthily I’ve found a new company, Graze, that makes it easier to snack on healthy food than it is to snack on chocolate and crisps and all the usual.

We’ve all heard that grazing is healthier than having 3 square meals a day. And we all know that 4 o’clock feeling where your energy levels have hit rock bottom and you just have to have something to nibble on. But finding healthy snacks, and choosing them over the more readily available snack food, is not always easy.

Problem solved! Graze deliver a box of fresh healthy foods to nibble on to your door (or desk) whenever you want it. Their selection is brilliant, loads of tasty nuts, dried and fresh fruits, seeds, olives and … Continue reading Grazing and long forgotten resolutions

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All things Mac

After years of gazing wistfully at the simple elegance of the Mac but being too scared to abandon all that I knew and head off into the unknown I finally crumbled. Yes I bought myself a Macbook and the best thing about it is that the transition hasn’t been painful at all. I don’t miss being able to right click and I definitely don’t miss the frequent crashes I became used to. And let’s be honest, it is a thing of real beauty.

Not long after I converted to the Mac I decided I needed, not wanted you understand, but actually needed an iPhone. I love it! It has everything I could possibly need in a small pocket sized computer. There’s just one problem. It’s just not that great as a phone.

Yes you can browse the web, use Google Maps so you never get lost, access all of your contacts, sync your calendar, send emails and do … Continue reading All things Mac

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Return to Reality

After a year of traveling the globe it really was about time to get back to the real world. It was amazing to be able to take a year off and travel for so long and visit so many unique places. I tried things that I never thought I’d have the courage to do, hang-gliding over Rio, diving with sharks in Borneo and 5 day treks into the wilderness in Peru and Bolivia.

It’s funny though because traveling actually becomes your job, you settle into a routine of planning your next location and booking all of the essentials, and I know it sounds insane but it actually does become your job. Obviously a pretty amazing job – if only you could get paid for doing it life would be perfect!

Also having the same conversation every time you meet someone new becomes a bit tedious after a while, ‘Where are you from?’, ‘How long are you traveling for?’, ‘Where … Continue reading Return to Reality

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