Thread
Startup Marketing is hard.
One of the hardest parts is customer acquisition.
I have seen inside the orgs of 300+ startups.
Their biggest mistake has nothing to do with ad creatives, keywords or optimization...
It’s misunderstanding your "Revenue Event" 👇🏽👇🏽👇🏽
One of the hardest parts is customer acquisition.
I have seen inside the orgs of 300+ startups.
Their biggest mistake has nothing to do with ad creatives, keywords or optimization...
It’s misunderstanding your "Revenue Event" 👇🏽👇🏽👇🏽
Here's the concept: every biz has a “revenue event,” the moment the cash register rings.
• For Zynga, it’s when gold is purchased
• For DSC, it’s when you enter your CC
• For Rocket Mortgage, it’s CLOSING a loan
• For a SaaS company, it's when the bill is paid
• For Zynga, it’s when gold is purchased
• For DSC, it’s when you enter your CC
• For Rocket Mortgage, it’s CLOSING a loan
• For a SaaS company, it's when the bill is paid
I believe all customer acquisition (and arguably the entirety of the business) starts by identifying and deeply understanding this revenue event.
Everything prior to the revenue event is your marketing, everything after the revenue event is retention.
Everything prior to the revenue event is your marketing, everything after the revenue event is retention.
Here are (some of) the most important variables to get right around the revenue event:
1) Nominal size of revenue
2) Steps in the funnel
3) Time in the funnel
4) Economics in the funnel
1) Nominal size of revenue
2) Steps in the funnel
3) Time in the funnel
4) Economics in the funnel
1) Size of Rev Event
Zynga can make $2 or less in their first rev event, a single stick of lipstick maybe worth $10 in gross profit, a Disney+ subscription someone may buy annually for $100+, a mattress is $1000+, mortgage is $10K and a long term Saas contract is millions.
Zynga can make $2 or less in their first rev event, a single stick of lipstick maybe worth $10 in gross profit, a Disney+ subscription someone may buy annually for $100+, a mattress is $1000+, mortgage is $10K and a long term Saas contract is millions.
This impacts all of the marketing strategy.
For example, if you’re selling single low priced make-up SKUs, the keyword “mascara” will likely be priced to your economics but an impression on Facebook is competing with all of the above products and is likely to get priced out.
For example, if you’re selling single low priced make-up SKUs, the keyword “mascara” will likely be priced to your economics but an impression on Facebook is competing with all of the above products and is likely to get priced out.
2) Steps in the funnel
One of the largest value creators in cust acq is how well traffic converts to revenue AFTER the click.
Zynga goes from impression to click to download to charge from Apple, not many steps so most of the optimization happens after the rev event
One of the largest value creators in cust acq is how well traffic converts to revenue AFTER the click.
Zynga goes from impression to click to download to charge from Apple, not many steps so most of the optimization happens after the rev event
A mortgage seller goes from impression to click to research to fill out lead form to qualification to sales call 1, 2, 3 to underwriting to house escrow to close.
Each step in that funnel is an opportunity to win vs your competition.
Each step in that funnel is an opportunity to win vs your competition.
The best companies know and optimize each step in their funnel.
It is a virtuous cycle that lowers your CAC and lets you compete more aggressively in the bidded media markets.
It is a virtuous cycle that lowers your CAC and lets you compete more aggressively in the bidded media markets.
3) Time in the funnel
How do you know if your marketing is working?
Understand the time from impression to revenue event. If you measure too slowly, you will not react, test or optimize fast enough.
If you measure too fast, your data will be incomplete and cause thrash.
How do you know if your marketing is working?
Understand the time from impression to revenue event. If you measure too slowly, you will not react, test or optimize fast enough.
If you measure too fast, your data will be incomplete and cause thrash.
Zynga can measure daily or in some instances faster.
Rocket mortgage has to wait 90-180 days to know how their impressions matured to revenue. Knowing this also flows into strategy/tactics.
Beyond timing, optimizing each step of the funnel is critical which brings us to…
Rocket mortgage has to wait 90-180 days to know how their impressions matured to revenue. Knowing this also flows into strategy/tactics.
Beyond timing, optimizing each step of the funnel is critical which brings us to…
4) Economics Of The Funnel
The best marketing teams I’ve seen know the marketing economics of each step of the funnel off the top of their head and are constantly optimizing these economics.
They don’t just think in CPM or Cost per acquisition.
The best marketing teams I’ve seen know the marketing economics of each step of the funnel off the top of their head and are constantly optimizing these economics.
They don’t just think in CPM or Cost per acquisition.
For example:
In Gaming: “Cost per Registered Install” “Cost per 3Day Revenue”
In Mortgage: “Cost per Lead”, “Cost per Sales call”, “Cost per Underwritten Loan”,
In OTT: “Cost per First watched show”, “Cost per Annual sub.” and other metrics like Volume of impressions per X.
In Gaming: “Cost per Registered Install” “Cost per 3Day Revenue”
In Mortgage: “Cost per Lead”, “Cost per Sales call”, “Cost per Underwritten Loan”,
In OTT: “Cost per First watched show”, “Cost per Annual sub.” and other metrics like Volume of impressions per X.
Now imagine you’re Rocket Mortgage and you understand you make $5k per loan.
What can you bid on FB or Goog for an impression/keyword?
Well, if you’re 5% better than competitors at each step of Click to Lead, Lead to Sales call, Sales call to underwrite, underwrite to close...
What can you bid on FB or Goog for an impression/keyword?
Well, if you’re 5% better than competitors at each step of Click to Lead, Lead to Sales call, Sales call to underwrite, underwrite to close...
... you’re 25%+ better (there’s compounding), you can pay 15% MORE and still end up with a better CAC.
And in paying more, FB/GOOG will serve you way more volume of impressions leading to a virtuous (and continuous) cycle of compounding customer acquisition.
And in paying more, FB/GOOG will serve you way more volume of impressions leading to a virtuous (and continuous) cycle of compounding customer acquisition.
I talked with @patrick_oshag about this in more depth last year.
@patrick_oshag There’s a ton more to the “how” here (e.g., creative testing, media optimization, team recruiting/training) which is covered in the podcast and which I will highlight with more threads this year.
Follow me @jspujji if you’d like to learn more marketing and entrepreneurship!
Follow me @jspujji if you’d like to learn more marketing and entrepreneurship!
@patrick_oshag If you're a small and fast growing startup, I have another secret to share.
@GrowthAssistant
You can be much more productive leveraging offshore talent. It helps my teams focus on strategic projects because our amazing “GAs” take on the manual work
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@GrowthAssistant
You can be much more productive leveraging offshore talent. It helps my teams focus on strategic projects because our amazing “GAs” take on the manual work
www.growthassistant.com
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Wes Kao @wes_kao
·
Jul 2, 2022
Great thread 🔥