Customer Acquisition

The Overflow Effect – How My Client Doubled their Revenues from their Facebook Ads

May 12, 2016 by influexwp Leave a Comment

Imagine a scenario where all you’re doing is running Facebook ads, let’s say a video ad in particular. And you’re not running much of any other media – no search, no affiliates, not up on Amazon. Whether you think you’re killing it or just can’t seem to crack the code, here’s something you need to know:

You may be giving up more than 50% of the sales you could (should) be generating.

Why? Because just like we experienced when I was overseeing TV media at Beachbody, there’s a spillover effect (sometimes massive) from platforms, especially ones using video, to, well, everywhere else. Consumers don’t all immediately purchase. Some go do research of their own on Google and Bing, others go looking for promo codes to see if they can find the best deal, and some just go to Amazon because they are loyalists.

Let me cut to the chase as simply and quickly as possible – if you’re running any sort of volume on Facebook (video or otherwise) or on YouTube or on TV, you have to, have to, have to run, at the very least, the following:

Paid search ads on Google and Bing for your brand terms & trademark terms, including misspellings of both, as well as any buzz phrases or USP’s you include in the marketing (think, P90X’s “Get ripped in 90 days”)

Too many people underestimate Bing. Sure it’s much smaller than Google, but it’s still bigger than zero, takes very little to manage it, and usually has a very high ROI.

And if you don’t those revenues or margin, do you mind if I take them? Didn’t think so. All those little’s will add up. That’s how you win.

Affiliate channels – whether you’re set up thru networks like Commission Junction, LinkShare or otherwise, get going with your affiliate program. Especially if you have a physical product, do as much as possible to get connected with the top affiliate networks – they’re the ones who can and do drive more than 70% of the traffic – Ebates, ShopAtHome, RetailMeNot, Offers.com, Savings.com, etc.
Amazon – I’ll keep saying this until I’m blue in the face. if you have a physical product, you need to be up on Amazon. Assuming you want to make more money. Yes, absolutely, it’ll cannibalize some of your sales. But a very small percentage of them, so little relative to the incremental revenues you’ll get that you won’t stress about it. There are a ton of folks out there who are Amazon buyers only. And correct, you don’t own the customer. But would you rather have fewer sales or more sales?

To illustrate the ripple (sometimes called a “halo” effect, which frankly I can’t stand), let me show you some stats from a campaign I managed for a client.

We scaled from $100 a day to $12K per day in 2+ weeks on Facebook, drove 17 million video views, 30,000 shares, 10,000 comments and 125,000 total engagements. In 8 weeks, we generated over $500K of revenue on roughly $190K of media spend, which for this campaign was better than goal. The only reason we pushed like this was because we saw the ROI. (As you look at the chart below, the reason for the precipitous decline is that we ran out of inventory – yes, a major bummer. But we are finally back up and seeing similar performance numbers, after a huge break.)

Here’s what I think is particularly notable in this graph: at the peak, Facebook represented 80%+ of the media dollars spent for this product (the blue line), but less than 50% of the revenues generated from the campaign, when measuring last (or really even first) click attribution. The blue column is Facebook-attributed revenues vs. the organ column which are revenues attributed to another channel.

Put another way, we spent the vast majority of the media dollars on Facebook, but got the majority of the orders through non-Facebook channels. So had we not been on Google, Bing, and set up with affiliates, we would have given up more than half our revenues. In this case, we actually didn’t own the product on Amazon, and that represented another 20% of revenues.

I’m a big believer of appropriately attributing orders back to trackable media, but in this case, because we knew what the baseline was prior to the Facebook media blasting off, it was very clear that the lift in Google, Bing and affiliate traffic was the direct result of the Facebook media. Had we not looked holistically at all media and revenues sources, we would have also miscalculated the real value of that Facebook media.

Frankly, I’m amazed more people aren’t talking about this effect. I’ve mentioned this at a few events I’ve spoken at in the past couple months, and I’ve literally seen people leave the room afterwards to tell their traffic folks to make sure any gaps they had are plugged.

Whether you’ve dismissed or ignored these older channels, at the least, get the basics in places. (I’m not talking about long-tail non brand terms. I’m talking about keywords like your brand. Very targeted, highly qualified traffic.)

And like I said earlier, if you don’t want the margin dollars from Bing (or anywhere else for that matter), give me a ring. But something tells me you want to keep all of it. So make sure your campaigns are set up to do so.

If you have additional insights you’d like to share, I’d love to hear them below.

Don’t make these two mistakes when doing competitive research

April 26, 2016 by influexwp Leave a Comment

Learning and modelling off of your competitors is something everyone should be doing.

Whether you are new to a field or a long-time player, anyone can benefit from seeing what others are doing, if only to spur some new ideas.

(Note, modelling and learning is different than flat-out plagiarism. There’s a fine line between “not reinventing the wheel” and copying word-for-word. Don’t be afraid to use others as a model, but just bring your own creativity or persona to it.)

For purposes of this article, I’m going to assume the business is a digital marketer, but the lessons apply everywhere.

What most people do when they conduct competitive research is that they go through someone else’s funnel in the same way that they assume a “normal” buyer would. They want to see what the buying experience is. And so they go and buy the product or service.

Totally makes sense and is logical. You’ll see some of the steps, see what types of offers they are making, and what the experience is of receiving the product or service.

But if that is all you are doing – essentially buying once from a competitor, the first time around – you’re missing out on additional valuable information.

In particular, here are 2 items to add:

Don’t buy.

At least not right away.

It sounds really simple, but go thru the sales process, but don’t actually buy anything. In doing so, and this is assuming the marketer is at least halfway decent, you’ll start to see retargeting ads all over the web. Pay attention to what they look like, where they appear, what types of messaging and offers they include.

Also, again assuming the marketer has some level of sophistication, they will have a different set of emails that they send to buyers vs. non-buyers. And so by only buying, you miss out on all those non-buyer emails. Given that 95% of people who hit your site won’t convert, your ability to remarket to them is crucial. Most people only focus on banner / Facebook retargeting ads, but forget about email (on multiple levels). So go thru a competitor’s funnel and make sure you submit an email address. Then give it a week or two to see what you get hit with.

(Quick note, the easiest way to know which emails are for buyers and non-buyers is to use a feature in Gmail most people aren’t aware of. By simply adding “+” and whatever words you want, you essentially have an infinite number of email addresses to use, all hitting your inbox. For example, if your email is bob@gmail.com, then you can use bob+amazonbuyer@gmail.com and bob+amazonnonbuyer@gmail.com as your email addresses and those will all go to the same place. Then just set up a custom filter and custom label. The emails will end up with tags that will help you identify them quicker than seeing what the actual email address was as each email comes in).

By the way, this approach of not buying can easily be applied in the offline world. See what a sales rep does after you say no. How do they try to overcome objections? When do they call you back? Do they send emails. Clearly, there’s a lot more variability by sales rep in most companies, and it’s much costlier – both for you and for the other party – so much so that you may not want to do it. (Not to mention getting on someone’s list and receiving an email is much cheaper than having a sales rep call you back – I prefer not to do the latter, but you have to make your own decisions.)

My point is that research is research – it’s just the process and media that might be a bit different.

Remember that the marketer might be testing something new.

Good marketers know that they need to be testing all the time. Unfortunately, you can’t know whether you’re in a test cell or in a control version of someone’s funnel. As such, you may be in an experience that they are testing out – buyer or non-buyer – and so need to keep a healthy sense of paranoia as you’re doing competitive research. You might even need to go thru it a couple times (as a buyer and non-buyer, depending on how good you think they are).

The reality is that you shouldn’t accept and immediately implement anyone’s funnel. You don’t know their business model inside and out. They may be optimizing for revenues, for breakeven, or for a metric that means nothing to you. Who knows? So that paranoia should be in place even if you knew for certain you were in a control experience. The point is to see some new things and then figure out how you might want to test for your business.

Neither one of these strategies is rocket science. Behave like a buyer as well as a non-buyer. You’re not looking for the info about a data set of 1. You’re looking for what the 100s and 1,000s of visitors to your site do. And then just be slightly paranoid because you be part of a test your competitor is running. Be thoughtful and careful about trusting that what you experience is actually working.

Just as you read books from folks you admire, to learn from the experience and wisdom, so too should you do what you can to learn from those around you in the marketplace.

What mistakes have you made or have you seen others make? Leave a comment below.

Customer LTV: The Single Model Your Business Success (or Not) Relies On

October 12, 2015 by influexwp 1 Comment

If your business includes the following: 1) get customers; 2) make a profit from those customers; then this post is for you. While I’m being a bit tongue-in-cheek, I’m not kidding all that much. Because there are some fundamentals about how you manage your business model that transcend all business types.

In my recent posts, I’ve made reference to understanding the value of a customer. I think it is the single most important piece of information you need to have to run your business. This applies regardless of what category you place yourself in – direct response, brand, or anything else. And in a lot of the work I do with folks, I raise it early in our conversations not simply because it’s neat and interesting to have, but because:

If you are running any paid media, you need to know the value of a customer to know if the media you run is working – and what “working” actually means
It helps to ensure you actually understand your business model. As a unit economics model, it has to capture what actually shows up on the P&L, and in so doing, you figure out how much you make per customer. That is a lot more important than most people think. If you’re not making money, on average, on an individual customer, then you’re not going to make it up on volume…
With this model, you create a way to understand the key levers in your business, which, AND THIS IS THE MOST IMPORTANT PART, helps you to determine what ACTIONS you take. Having a model that does NOT result in action means there’s something wrong with the model or you’re not using it correctly.

So what the heck do we mean by the value of a customer (or “Customer LTV”). I’ve seen so many different definitions:

The revenues generated on a customer’s first transaction
All the revenues generated by a customer regardless of timing
Gross revenues less refunds/returns over the life of a customer
Net revenues less costs (with varying definitions both of what each of those means)

To be clear, NO DEFINITION IS RIGHT OR WRONG. But what is crucial is that whoever is using the information knows what it means and is using the information in an appropriate manner.

So let me jump in to what I consider Customer LTV:

For a given media source, what contribution margin does the average customer generate.
- For example, when you run branded search, what’s the value of that customer? When you run Facebook ads, what’s the value of that customer?

How, then, do you calculate contribution margin?

First, calculate Pre-Media Margin by taking all the revenues generated by a customer over their lifetime, adjusting for returns/refunds, customer cancellations and credit card declines (“Net Revenues”) less all the variable costs that are the direct result of those revenues. These may include physical product costs, merchant processing charges, shipping, warehouse/fulfillment expenses, customer care, server costs, and bad debt.

Net Revenues Less Variable Expenses = Pre-Media Margin

Then, include a desired margin on your revenues (more on this in a moment). The difference between the Pre-Media Margin and Target Contribution Margin is the amount you can pay to acquire a customer and still hit your goal. Usually the term “allowable” or “target customer acquisition cost” means the goal, and then the actual figure (media divided by customers) is CPO or CPA (Cost per Order / Cost per Acquisition).

Pre-Media Margin Less Required Profit = Target Customer Acquisition Cost / Media Allowable

Thus: Contribution Margin = Net Revenues Less Variable Expenses Less The Cost of Acquiring a Customer

Notice that by working to understand the value of a customer, you have backed into how you can afford to pay to acquire that customer. Which in turns allows you to manage your media in a more explicit and intentional manner. You now will have a way of determining what it means for your media (marketing) to be “working” or “not working”.

This is a very simplified view of a customer lifetime value model (also called a margin model):

I like to break down the numbers into front-end (first transaction) and back-end (subsequent transactions), seen below. What time horizon you use for the subsequent transactions is a bit of a business decision, based on cash flow requirements, risk associated with those revenues, etc.

(Note: this structure is not a proprietary one. Most of the top direct-response marketers use a version of it. You can also see how the folks at Digital Marketer use it here. Or if you want to dig in really hard, this is a great book about how to use metrics in your business.)

In the below example, imagine a marketer who signs up a customer for a trial offer and then upsells them into a subscription or continuity offer – these are clearly NOT their numbers, but anyone familiar with Proactiv, the anti-acne product, might have a model structured in this way. The company may be subsidizing the first bottle knowing that customers will buy a bunch more in the future.

In reality, the media cost should actually be part of the front-end because the marketer pays for the media on day 1 but has to wait some time in the future for those future sales to come in.

Cash Flow Implications

Unless you’re one of those fortunate marketers who has a ton of cash in the bank, even if you knew with a high degree of confidence that customers will generate a good amount of revenues (read: cash) in the 90, 180, or 360 days after their first transaction with you, you have to be sensitive to cash flow. Which will affect how aggressive you can be on going in the hole with new customers or how aggressive you can be with scaling your media.

This decision is business-specific. If you have a physical product business, you may need to pay for inventory well before your continuity orders kick in (or you may have great terms or a short lead-time that allows you to not have to carry that much inventory until you actually need it).

This is where information / digital products have an advantage, since often times one of the only/biggest investments is the creation of the product/service. And then of course the media spend to acquire the customer.

Below is very simplistic example to showcase the point for a physical products business:

Before even running media, this physical product marketer has already paid out $2,000 for inventory.
They are running a low-priced trial offer so they may not cover their initial expenses even when they’ve acquired customers.
Perhaps they don’t pay for media right away but pay weekly, and perhaps the warehouse gives them 30 days to pay for work they’ve done.
At that point the first set of continuity orders ship out and generates revenues/cash for the marketer. If this were a multi-pay offer, then that push out cash even further.

This post isn’t meant to focus on cash flow but you can see the implications on cash when running media. And it’s something that you have to model. You need to understand your model, so that you can pay your bills, based on when customers will be paying you.

For whatever reason, the 90-day breakeven seems to be a standard that many people I talk with use, but again, that depends on your model.

Target Margin

In the lifetime value model above, I used a return on revenues of 15%. This is another business-specific decision. While it is somewhat arbitrary, there are a few factors you want to consider when setting it.

What are your business goals? If your goal is about pure customer acquisition and you don’t have a high burn rate, you might be able to run at a low/zero margin.
- Who would do this? Plenty of VC-funded companies run at negative margin, or if your play is about building a list to monetize, that strategy might push you to run this way.
- What is actually possible? As I’ve mentioned, one of the values of this unit economics model is to understand your business model. You may find that your revenues and cost structure don’t support the margin you thought was attainable. Kinda important to know.
- Balancing volume with margin – higher margins are always nice but you have to balance that with volume.
  - This point is much more nuanced and doesn’t have a good scientific explanation. All I know is that it’s true.
  - For each form of media and each campaign, there seem to be breakpoints where if you have an allowable above a certain number, you can jump your media spend. So while you might want to increase your target margin (thereby lowering your allowable), it might mean that you are making it more difficult to run at scale. Someone should always be looking to see how much media they think you can run based on different allowables/margins.

A More Exhaustive Analysis

Let’s dig deeper and look a specific model, a physical product (in this case a supplement marketer).

Before jumping in, I need to make something clear – these models apply for each media channel. If you only have 1 channel or don’t have the info to separate out different customers, use what you have right now, but start building the tools and systems to track customers from different places.

The values used below are for an average customer. Meaning, if everyone takes your $5 initial offer and 15% of the people take your 1st upsell which is $100, then your average order value is $5 + 0.15*100 = $20. For the back-end, it’s the same thing – the simplest way to calc that figure is to take all the back-end revenues generated by customers (typically we group them into cohorts based on the timing of their first transaction) and divide by the number of customers.

In this below example, you can see I’ve expanded the model to include more line items that are relevant for this business model. Let’s go through each step by step:

The marketer generates gross sales, but some customers call to cancel their order right away and some credit cards don’t get correct authorization.
That leaves shipped revenues, revenues associated with orders/customers where an actual product shipped out.
A certain percentage of customers want refunds – I’ve assumed 10% for both front and back-end when in reality it’s rarely the same. Nor is it the same for customers who are getting their 2nd bottle versus their 7th one. Long-time customers, not surprisingly, have much lower return rates than newer customers.
That gets us to net revenues.
At this point, we need to deduct all the costs associated with these orders/revenues – the physical product, fulfillment and warehouse fees (which many people include in their product cost), shipping expense (UPS, Fedex, USPS, etc.), credit card processing, customer service, and bad debt assuming this marketer allows people to pay in installments.
We are now at pre-media margin. And in this case, the marketer wants a return of 15% on their revenues, which means that as long as this marketer spends $48 or less to acquire an average customer (reflected in this model), they’ll do so.

Each of these line items can have further nuance, for example:

There are warehouse costs incurred when customers return product, not to mention the product returned may or may not be salvageable.
Cancels on the front-end are likely different than on the back-end.
But wherever you are, and whatever level of detail you have for your business, start there as your baseline and then work to improve the information you gather.

To my prior point that this model should drive action, in addition to helping manage media, this marketer might identify an opportunity with reducing shipping expense. Not that it is easy to do, but if this marketer could decrease the average shipping costs for the back-end from $16 to $13, that would add $3 to their media allowable. And as so many folks before me have said, “He/She who can pay the most to acquire a customer, wins!”

This is a fictitious model, but if it were real, I would work with the team to understand what opportunities they have both to increase revenues and to create efficiencies in the cost structure, serving both the media allowable here as well as the broader P&L.

Other Business Models

Info Products

What about marketers who aren’t selling a physical product but rather are selling an information product, like an online training program?

Well, the process is the same, but the specific line items would be different. If it’s a pure info product, then there would be no shipping or warehouse fees, nor physical product costs. Some of those might be replaced with the cost of delivering the product – whether an e-book, or server and bandwidth fees associated with a membership area.

Lead-Gen

The same structure of the model works for lead-gen folks who are not managing to paying customers but to leads (names on a list, email opt-ins, etc.). The only difference is that the Target Customer Acquisition Cost needs to be multiplied by the percent of leads who convert to paying customers. That gets you a Target Cost per Lead

What about fixed costs – why are those NOT included?

Noticeably missing from these models are fixed costs, such as labor, rent, technology, and even product development costs (R&D for a product, the cost of developing a training program, etc.). I’m often asked why I don’t include them in the model. There are a few reasons:

The goal of the model – often referred to as a “Margin Model” – is to understand the marginal revenues and costs associated with new customers. As such, it is very rare that an average, additional customer creates additional fixed cost requirements for a company.
1. As you scale the business, you will likely need more resources to support the growing customer base, but this model is capturing the economics at the unit level, not at a macro level.
2. Put more simply, acquiring and servicing a single additional customer doesn’t drive you to hire another person.
3. In addition, these fixed costs mentioned above are often sunk costs – whether you generate 5,000 customers, 100,000 customers or 3 customers, for at least a period of time, you are already burdened with those expenses or you have already incurred them.
  1. Now, you absolutely need to run some analysis and look at your full P&L to know how many customers do you need, assuming you hit your target CPA, to breakeven when you factor in fixed costs, G&A, etc. – this is crucial work that I am not under-emphasizing. My focus right now is on this unit economics / margin model exclusively.

Interestingly, I get asked whether or not to include headcount in this model but no one ever asks whether investments in technology (servers, software, etc.) should be included. My response, in addition to the point above, is that you should look at your people similar to technology – they are investments in your company’s future.

Is it wrong to include any of these fixed costs in the model? No. But I would say that you’ll be under-cutting your allowable, and especially as you look to scale, you’re going to be holding yourself back from pushing as aggressively as you might ordinarily.

If you can’t tell, I’m pretty passionate about this topic. But not simply because I come from a quant background, but because I believe strongly that it is one of the crucial components of running any business.

You need to have someone who owns your model(s). And then have people who work with those analysts to identify points of leverage in the business and specific tests to run to optimize your business. The ROI on this is a no-brainer. Not to mention it might save your business.

Please leave a comment below because I’d like to hear what you think.

The 14 Questions All Marketers Should Have Answers To

October 12, 2015 by influexwp 2 Comments

A friend recently asked me for a list of questions that would help marketers make their business more efficient and optimized. These questions span a variety of areas within a business; while not all may be relevant to every business, the vast majority of them do (or should).

There is no right or wrong answer to any of these. What’s more important is being able to answer these questions yourself or knowing where and who to go to. None should take more than 5 minutes to answer; if so, then that means you aren’t giving them their due attention. (Hint: these are important points of leverage within most/all organizations.) And if these are entirely new questions, then this is your chance to address key areas of opportunity within your business.

1. What are your top 2 sources of traffic? Are they different than your top 2 sources of paying customers?

No one is good at everything. That goes for marketers as well. It’s a rare company that is actually good at more than 2 media channels. Folks great at TV are rarely just as exceptional online. Even within online media, it’s rare to find a company that is great at SEO, YouTube, Facebook and banner advertising. Which sorta makes sense. You test a bunch of stuff, find success in 1 or 2 areas, and then push hard there to grow. And then as a company grows, competence builds in these areas.

As it relates to the question(s) above, many people don’t actually know where their biggest volume of traffic comes from. And for a lot of folks, the list of traffic sources vs. list of converting customers isn’t always the same. Impressions, reach and visitors don’t always translate to paying customers. Understanding that breakdown and then managing accordingly is important to most efficiently use resources, dollars, etc.

2. What is the average lifetime value (“LTV”) of a customer?

The single most important question any marketer (not just a direct response marketer) can answer. How much is a customer worth? $100? $1,000? Are you including the first transaction or all future transactions as well? Do you actually have the tools, systems and people in place to measure and track this information? When you think of the value of a customer, are you talking revenues or profits? Do you know if customers from different channels vary in LTV?

I don’t know how you can manage your media or your business without knowing the answer to this question and the resulting questions that come out of it. How do you know if your media is working? Are the customers you acquired last week actually going to make you money? Do you have the cash position to tolerate losing money on the front-end with the knowledge (not hope) you will generate more revenue later? What steps are you taking every week to increase the value of a customer, either through increasing sales or decreasing costs?

Understanding the value of a customer is crucial for 2 reasons: 1) it helps to ensure the business model is actually intact; and 2) it helps to drive future actions.

3. What is the average amount you pay to acquire a customer?

A direct corollary to the prior question but it deserves its own question. Some call this a media allowable, CAC (customer acquisition cost), or SAC (subscriber acquisition cost). The name used doesn’t matter. Put simply, how much did you spend to get a new customer? For most folks that means media dollars divided by new customers – assuming you can match customers back to media. For others, you have to factor in PR, promotions/sponsorships, and other non-trackable media spend. Regardless, if you don’t know the value of your customer (#2 above), you won’t know whether your cost to acquire a customer works in your model. For example, while it might sound like a lot to pay $10,000 to acquire a customer, if you are a high-end divorce attorney, that might actually be cheap given the millions of dollars a client might generate for you. And while a typical Starbucks customers spends around $6 per visit (I’m making that number up but it feels about right), given just how many times they return over not just 1 year but numerous years, Starbucks may be able to spend hundreds of dollars to acquire a new customer and make it profitable.

4. What do your customer service reps say to customers who want a refund because they feel your product/service is too expensive?

My guess is that even the 99 Cent Store gets customers who say the product was too expensive (Note – I’m not trying to live in an ivory tower – I know there are a ton of people who can barely afford those stores, I’m just picking a low-priced establishment to make the point that every company selling something most likely has customers who think their products are too expensive.). The question is whether someone has provided guidance to the customer service reps on what to say. I’m not suggesting making life miserable for customers who want to return a product. But assuming the product is of value, then presumably it’s a positive for customers to have and use it.

The real issue is whether the product/service actually has value. Are the people who are buying it the ones it would benefit? Are customers clear on what they are purchasing? And then do customer service folks understand the value so that they can make sure that customers understand and capture the value.

5. When was the last time you personally ordered your own product / service?

Everyone is busy. I get it. And we get so caught up in managing the business, managing others, looking at analyses on the business, etc. that we forget one of the most valuable and simplest things of all – putting ourselves in the shoes of our customer. And that means going through the same process that an actual customer (or potential customer) goes through. Whether that means calling a phone number, visiting the website, going into an actual brick-and-mortar location, or even buying person-to-person, pretending like you are a first-time customer and playing that part in the buying process will likely make you appreciate the pros and cons of what you are taking others through.

A couple more thoughts – if you sell online (I know that sounds silly to actually say today), go through the process both on your desktop/laptop as well as your smartphone. Also, once you’ve bought the product/service, try to return it and see what that experience is like (see #4 above).

6. When was the last time you personally ordered your top 3 competitors’ product / service?

Here’s a shocker to some marketers – your competitors are better than you in at least one area. You actually aren’t the best at every single component of your business. Competitors are also a great source of ideas and inspiration, both because of the good and the bad things they do.

See what their experience is like. You’ll likely pick up a thing or two.

7. Have you opened the emails your company sends to customers on your smartphone?

Because that’s where the vast majority of them are reading them. And do you know where they physically are when they are reading those emails? Especially if you send them overnight or early in the morning, they are reading them (and likely deleting them) while sitting on the toilet. Email, just like TV, is too often described as dead or at least no longer relevant. Yea, no. There are still plenty of companies that use only email (and TV) to build 9-figure businesses.

But it is getting harder to get through the clutter. So whether it’s evaluating the subject line, design, or content, experience your emails how most of your customers are.

And if you don’t feel like you are aggressively emailing your customers, you probably aren’t. (Btw, here is a great analysis of the email marketing campaign used by the Obama campaign in 2012 – https://blog.kissmetrics.com/email-marketing-lessons-obama/.)

8. If you have a physical product, are you selling on Amazon? How many images do you have on your listing?

News flash, Amazon is taking over. I’ve already written about this once before here, so I won’t revisit it in depth other than to say if you put your physical product up on Amazon, you’re going to make more money than you do today. It’s largely incremental, and there are a lot of folks out there (myself included) who try to make as many of our purchases on Amazon, even if we found your product on your website.

The question about the number of images is really about how optimized is your listing. You are allowed 7 images. Most people have 1-2. Not to mention, there are a host of additional areas to optimize your page – the bullets, description, and reviews.

If you don’t have your products up on Amazon, get them up there.

If you don’t have some who is accountable for maximizing Amazon, get that assigned – whether it’s their full-time job or a component of it. It needs an owner.

9. What happens to customers whose credit cards decline / default on a multi-pay or a subscription payment?

Another point I previously wrote about here, but these are really important points that I keep re-raising.

10. How often do customers get a call from someone in your organization checking in to see how things are going?

I was at a mastermind event last week where I heard the CEO of MemphisInvest describe how every month, their folks call each of their Company’s 1,200+ investors to see how they are doing. And yes, there are investors who tell them they get the point of calling and don’t need a call every month, but I was struck at the level of service. It also goes to show how much they think of their offer that they aren’t afraid to call customers. As silly as that may sound, many marketers don’t want to talk with their customers, whether that’s because they know their product isn’t good, they think it’s a headache to deal with customers, or they just don’t care to improve.

As with many of these questions, there are implications of the original question. Each reflects assumptions, attitudes, and philosophies of your business.

11. What is the 2nd item (product/service) you offer to a customer?

It’s amazing how many people don’t offer more to their customers. Some think it’s sneaky or beneath them. But there are countless examples in mainstream companies where it’s happening everyday:

-Do you want fries with that?

-For $0.25 more, you can get the large drink instead of the medium

And if you think it’s only at McDonald’s or the movie theater when this happens, go add an item to your Amazon cart. What shows up immediately below is the “customers who bought this product also bought these” section. That’s an upsell.

Depending on what the initial offer is, upsells can be orders of magnitude greater value than the original offer. But whether they add up to 10x or .25x more, adding them – I’ve seen up to 8 and still make sense – is a crucial way to add to your customer LTV.

12. What was the last test you ran on your thank you page?

Or let’s just start with, when was the last test you ran period? Too many people aren’t testing enough (or at all). There is just no way that what worked last year or what worked initially is the most optimized way of doing things. But it’s also not about just blindly switching things – your organization has to become a testing organization. It needs to be built into the culture. Testing means failing, and too many organizations are fearful of failure.

But testing is the only way to get better.

Please do it.

13. What tasks that you individually do are the highest value and which are the lowest value? What are you doing to delegate or eliminate the lowest value ones?

There is a value associated with everything we do. Hopefully it’s positive, sometimes it’s neutral, and the reality is that some of our actions have negative value. But when was the last time you looked at how and where you spend your time, and whether explicitly or otherwise, put a value on each of the things you do? What during your day is the greatest ROI thing you do? For some, it’s about writing copy, for others it’s about building technology, for other it’s about hiring for key roles. Too often people are doing a lot of the things they did when they were on their own or didn’t have a team. But those can be really really low-value time-sucks. Everything from managing your schedule, filling out expense forms, booking travel, etc. This is not to say that you necessarily need to hire someone. New tools like Expensify make the expense process tons easier. Or for $10/ month you can use travel app Native to help with booking, re-scheduling, etc. It’s time to start getting rid of those low-value tasks, especially those you detest, that you’ve been doing “just because.”

14. In 2 sentences, describe where you want your company to be in 18 months?

Depending on your role, you may have varying ability to affect your company’s strategic vision. Sounds obvious, but a lot of professionals feel that they are so busy that they don’t have time to plan. These are the same folks who are usually complaining about the same types of issues over and over.

As the saying goes, “If you don’t know where you’re going, all roads lead there.”

For your sake and for that of your company, you need a written plan of where you want your company to be in 18 months. In your head or even spoken isn’t good enough. Something happens once you write something. It forces a different clarity of thought, allows people to react to it, and serves as a reference document that everyone can refer to.

Bonus Question:

15. In 2 sentences, describe where you personally want to be in 18 months?

And then there are folks for whom business planning is a no-brainer, but they forget that planning for themselves should also be such. Whether it’s around the New Year, halfway through, or a quarterly review, it’s the same idea as business planning. You certainly need to know where you are and then plan for how to get where you want to be.

Btw, one of the best books I’ve read recently about getting from Point A to Point B is Straight-Line Leadership by Dusan Djukich. My favorite line from the book is, “It’s been said that your life, when it’s over, will either be a warning or an example.” Powerful words.

Feel free to take this list and have a conversation with your partners or management team. Because these are some of the more important issues every business should not only be paying attention to but also be working to optimize.

Please leave a comment below because I’d like to hear what you think.

The DR vs. Brand Conundrum No Longer – Modelling Income vs. Wealth

October 12, 2015 by influexwp Leave a Comment

If you asked a DR marketer or a brand marketer what they think of the other, you would most likely hear about a lack of understanding of the other model, possibly even a snide or cynical view of the other.

Most DR marketers are pretty proud, borderline arrogant, about how they approach marketing – and very few truly care about building a brand; I say this not because they avoid spending money on “brand” advertising, but rather because of their business practices. More on this point in a bit.

At the same time, many brand marketers either don’t really know what DR is or describe being a DR marketer themselves, but in a way that most hard-core DR marketers would scoff at. Managing to impressions or reach is not how a pure-bred DR marketer manages their media. But a brand marketer’s emphasis on the longer-term is usually superior to that of DR marketers.

So why such a difference? Why are direct response and brand often times so much at odds with one another?

Some of it is legacy. And some is just practicality.

From a historical perspective, many DR marketers had a churn-and-burn mentality, working to extract as much money from a customer as possible, knowing full well that that customer would rarely refer the product (rarely a service) to a friend once that relationship (read: billing) had ceased. Very few DR marketers – think infomercial guys from the 90s – were interested and working towards building a business. They behaved in a way that created the stereotype about infomercials – I remember hearing about a marketer that required a return be shipped in the original packaging, despite that the packaging was designed to essentially fall apart when originally opened. That kind of practice deserved a crappy reputation. And clearly reflected a lack of concern about impact on the brand.

What DR folks have done well, however, is being laser-focused on optimizing traffic and media, and maximizing revenues and customer LTV. Especially early on in a business’ life cycle, maximizing the return on money spent is crucial.

On the other hand, traditional advertising has been focused on branding and awareness. Once TV advertising was opened up, marketers realized they could dramatically increase their reach. The mentality was more about influencing public opinion, but the need to specifically track the effectiveness of individual media wasn’t as prevalent. It’s what spurned the comment, “50% of media doesn’t work, we just don’t know which 50%.” If a DR marketer said that, they be laughed at, fired, and/or out of business pretty quickly.

Where brand marketers have been particularly good, however, has been in, well, branding – crafting a story, persona and experience around a brand. More than that, they oftentimes have a greater attention towards true customer experience and satisfaction, and all the work that goes into increasing those measures.

So which is better? And which is more relevant in different phases in a business’ evolution?

The answer to both questions is “yes”…

The value of a DR sensibility is the attention towards optimization and increasing revenues/margin. For a startup with minimal funds, it’s almost a requirement to think this way. But for a business that wants to stay around for the longer-term, it’s nearly impossible to do so with a crappy brand (though the cable companies have done so in spite of themselves, but that’s a different conversation…). People want to associate with brands. A brand is what garners a premium vs. the generic option. A brand is what helps people to choose between multiple similarly-appearing offerings.

In some ways, DR can be likened to income, while brand can be likened to wealth. One helps you generate money, the other helps you to keep and grow it.

The reality is that both models need to be considered and used by all marketers. The idea that DR is a niche business model needs to end. DR folks understand the importance of tracking and measuring as much as possible and are obsessed with ROI of any spend. At the same time, unless an organization wants to continue to reinvent itself, sometimes weekly, and just wants to live in the acquisition world, they have to understand the value of a brand – and that understanding needs to be reflected in how the company treats its customers, how much they try to “extract” from their leads and customers, and frankly, how they realize that everyone customer interaction is both an opportunity as well as recipe for disaster if mis-handled.

These are not issues to address, especially when DR can be like a drug that a marketer wants to keep peddling, while being focused on brand can be really fun when it comes to creative advertising. But branding is so much more than media and advertising. Ultimately, the brand is your consumer’s experience and perception of your business. And anyone interested in building an enterprise that lasts any remotely-extended period of time, needs to pay attention to that experience.

Marketers traditionally immersed in one need to understand how to apply the relevant component’s of the other business model. Both have significant value and need to have attention placed towards them.

You don’t generate wealth without an income. And unless you pay attention to what you do with your income, you don’t build wealth.

And that is why it shouldn’t be a conundrum, but rather a matter of figuring out how both DR and brand fundamentals are relevant to your business.

Please leave a comment below because I’d like to hear what you think.

The 13 Things DRTV Marketers Should Know about Digital Marketing

October 12, 2015 by influexwp 3 Comments

For the most part, the days of “do you factor in online sales when you run TV media” questions are generally over. And so most traditional DRTV marketers have a website that primarily receives traffic driven thru TV media. But what many DRTV marketers don’t do well is drive cold traffic online. Below is a smattering of what I’ve learned with my time with some of the top digital marketers out there.

1. The pace is totally different, and you’ll likely have to battle ingrained cultural norms to be successful

I combined 2 points which I think are actually the 2 most important and the 2 biggest challenges DRTV folks have when it comes to digital. Everything online is faster than in the TV world. That’s not an attack on the DRTV world – almost like criticizing an oil tanker for not having a smaller turning radius. That’s because the process of putting something up on TV just takes longer. It has to be higher quality, historically stations only aired tapes (it’s gradually getting better), and as a result the cost of switching tapes is not free like it is when you want to switch SEM copy. Plus, if you lived in a world where you sent paper materials to your customers, that just exaggerated how “just right” everything had to be.

This results in certain types of cultural norms and business processes, frankly that were necessary to save money, avoid mistakes, etc. But in the world of online marketing, very little has to be perfect. Far from it. Not to mention, newer companies have the advantage of new technologies. You can literally get an online store up and running in a couple hours with Shopify. Google Analytics provides free tracking and analytics tools. WhatRunsWhere allows you to see what banner ads your competitors are running – to the point that you can download them and build your own.

But more than anything, people starting in digital media today just expect to operate at a fast pace. And the cost for DRTV folks comes both in opportunity cost, not to mention in trying to attract partners and employees from the digital world who are not frustrated by the “normal” pace within these organizations.

I can’t overemphasize this point enough. Just as some larger traditional companies have established new offices in Silicon Valley, it might be worth a new space (or at least part of the office) to allow the digital folks to do their thing.

2. Remember that cold traffic to your site from online media is probably not nearly as qualified as it is from your TV marketing

One of the huge benefits of running media on TV, especially long-form, is that you get the opportunity to educate, inform and excite your potential customers before they get to the landing page. As such, traditional landing pages for DRTV marketers don’t have to do as much selling as providing some additional and supporting info, and then to get out of the way of allowing a customer to purchase.

Driving cold traffic from online media to a site is akin to getting someone to click on the program guide. That’s just the first step. Depending on where they’re coming from, the content on the page – whether written, images, a video, or something else – needs to then do the job that the infomercial did. That’s because the customer is in a total different state of awareness. You can’t just put a buy button at the top of the page. Just because a customer doesn’t click doesn’t mean they aren’t interested; it’s just that it’s the wrong sequencing. My friend Perry Belcher (one of the sharpest guys out there) really taught me this lesson.

3. Online video (especially YouTube) is different than TV video

TV viewers expect a certainly level of quality, and are accustomed to a certain pace. Same with online viewers. Except that those 2 are different for an online viewer than a TV viewer (even if it’s the same person). For example, using multiple cameras for TV is normal, but on YouTube, while there are certainly some exceptions, direct-to-camera is the norm. And whereas a TV viewer expects clean cuts from one scene to another, online, consumers have become accustomed to somewhat choppy edits – if the result means less dead air and getting to the point faster.

Not to mention the form factor of mobile – people just can’t read as much on their smartphone as they can when they watch on their 40-inch flatscreens. This sounds like an obvious point, but check out how many videos you watch on your phone that have copy that is unreadable. And to those that say they didn’t realize or intend for consumers to watch it on their phones, well, that’s partly the point – consumers are doing things on their terms now more than ever before.

4. You need to learn a new language, but just like a foreign language, don’t try to learn it all at once

The following is a list of some of the more commons terms in digital marketing today:

SEO, SEM, Email, Affiliates, display, Social (FB, Twitter, Pinterest, YouTube, I/G, Periscope, Snapchat), VSLs, long-form vs. short-form sales letters, retargeting, drip-campaigns, reputation management, auto-responder sequences, exit pops, webinars, content marketing

Hopefully, many of those are familiar to you. And while you don’t have to know and use every single one of those, it’s about learning what different types of strategies and tactics are out there and then deciding which one(s) are relevant for your business.

Note: If you don’t have the foundations of SEO, SEM (especially brand search), retargeting (both thru Google and Facebook), and basic email marketing in place, I’d get those squared away first before touching anything else. The reason I say that is your TV media is already affecting those buckets, so I’d get traffic from your TV media sorted out first before adding new media.

5. You need to go hang out with new people

Just like learning a foreign language, you need to start going to the places where the people who are speaking this new language are hanging out. The beauty (and at times overwhelming part) is that there are a ton of conferences and events. One thing to note is that most of the events are content-heavy – where you spend most of your time in educational sessions, as opposed to in suites simply meeting folks. Traffic & Conversion Summit is one of the best events out there. There are a ton of affiliate events such as Affiliate Summit East/West, LeadsCon, etc. And NewsCred just put on one of the better content marketing events recently – what was particularly great was that I couldn’t make the event in NYC but they live-streamed it for free.

6. Sharing of information happens in a different way, especially amongst marketers

This point extends from the one just above. One dynamic that I’ve been utterly blown away by in the digital marketing world is the extent to which people share information. And I’m not talking about general statements such as “we use SEM to drive our traffic.” But I’ve seen folks break down the exact ads they ran, the funnel they run people through, how they retarget non-converting leads, their metrics, and much more. And in rooms where direct competitors were present. It’s pretty amazing. That’s a big part of what makes the educational sessions so highly-attended. There is high-quality content being shared. You may need to learn this new language, and fortunately there are tons of resources and people out there willing to teach you – sometimes even for free (see my prior post on podcasts – http://goo.gl/PH18xE).

2 highly-recommended resources I’d suggest:

-Digital Marketer – www.digitalmarketer.com – their blog is excellent and their DM Lab is unreal cheap ($39/month) for great content. At the very least, join their email list.

-Neil Patel – probably one of the best content marketing guys out there. If you go thru his posts, he will pretty much teach you content marketing to a level of detail that you didn’t expect – he posts in a couple places – http://neilpatel.com/blog/ and http://www.quicksprout.com/blog/ .

7. You need to buddy up with Google and Amazon

Two particular relationships that have to be built are with Google and Amazon (especially if you’re in the physical products world – see my prior post about Amazon – http://goo.gl/KFQBMG). Presumably you have been doing this anyways but it warrants repeating. Neither of them is going anywhere. They are big gorillas that are not afraid to push people around. But they are also HUGE drivers of traffic and revenues. And so a strong relationship there can make a big difference.

8. Facebook should probably be a 3^rd required relationship

I’m amazed that people still aren’t running ads on Facebook. At the very least, it should be used for retargeting. But I know people running 6-figure media dollars each week on Facebook. Profitably. Certainly, Facebook, just as Google has done, has started tightening up their compliance on what they do and don’t allow, but that just means being creative and adapting. And pretty much to be expected – each new property usually allows almost anything and everything to attract as many people as possible, and then once they’ve hit some sort of scale and feel like they can push back on advertisers (or just users in general), they start doing so. But re: Facebook, it’s essentially a monster database marketing tool. Not just for killing time…

9. Don’t stress about perfection in the way you do with TV (and print)

Already mentioned this above. But it bears mentioning a second time. Most everything can be pulled down and changed if you don’t like it. Find a way to get tests up as quickly as possible. Ad copy tests, images, landing page tests, back-end tests. Wherever you have traffic is where you should be looking to test. Just make sure you prioritize your higher points of leverage and that tests are kept apart, even if one is on the front end and the other is on the back end.

10. Your digital marketing employees and agencies aren’t nearly as focused on the phone channel as you are

It might feel like I’m being critical of DRTV folks. Far from it. Many have had a level of success that you have to appreciate. But this post is about an area where most DRTV marketers have fallen short and how to make improvements, not about talking about all the things that have been done well.

That being said, one area that deserves mention – because of implications on the digital side – is the phone channel. Most DRTV marketers show a toll-free number on the screen (BTW, at least on TV, you should be using 800 numbers – not as important on your site, but definitely on TV). As such, they (you) probably have a sense of the value of the phone channel. Most digital marketers don’t have that experience. So how and where you can add in the opportunity for people to respond via phone, even if it’s not primary, is where you’ll have to be mindful.

11. There are analogues to PI media

In the online world, they’re affiliates, who you pay per order, lead, or whatever is agreed upon. Just be aware that fraud is much much worse with online affiliates than PI agencies (where in my experience it was rare). If you’re going to work with affiliates, you have to have someone watching for fraud. And while in the DRTV world, PI is considered an add-on, there are plenty of online marketers who drive traffic almost entirely through affiliates (working with ClickBank, CJ, Share A Sale, and others).

12. Technology can make a big difference

And likely if you’ve been around for a while, yours is outdated. That doesn’t mean scrap everything and start from scratch. It doesn’t mean go spend $5MM. But it does mean that you should explore what’s out there (this article is 3 years old but it’s even more true today – http://goo.gl/EJz65h).

13. Your digital folks need to know what the rest of your business is doing

Whereas people only call an inbound telemarketing phone number after seeing your spot or show, pretty much anything can drive someone to your site, social properties, etc. A mention on a news program, an inadvertent Tweet, a user-generated video that goes viral. The company’s website and social properties need to be recognized as downstream of pretty much everything else. So while they might be in a different part of the building, they need to be kept in the loop. And they need to communicate effectively with the rest of the organization.

It’s been exciting to see how some DRTV marketers have embraced the digital world. My fear is that others continue to ignore it or simply choose to reject it. But just as companies are starting from scratch these days, it’s totally reasonable for traditional DRTV folks to build up their digital marketing capabilities, even if it feels like it’s from scratch.

There’s a lot of really cool stuff and opportunities out there. And it’s only growing.

Please leave a comment below because I’d like to hear what you think.

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