How Experimentation Fuels a Winning Customer Acquisition Strategy

But how do you find the right customer acquisition opportunities without burning through budget or over-investing in the wrong channels?

As part of our Summer webinar series, Optimizely recently hosted an online webinar: Making Every Click Count: Maximizing Your Customer Acquisition Budget.

On the webinar, we spoke with Pam Webber, the CMO of 99designs, the world’s largest marketplace for graphic design needs like logos, websites, product packaging, and more. Since the company’s founding in 2008, they’ve served over 350,000 customers. (Fun fact: Optimizely’s logo was created on 99designs many years ago!)

Pam shared her perspective on how to make the most of your customer acquisition budget, including the following topics:

• Planning and staffing for customer acquisition
• Reducing customer acquisition costs
• The top acquisition challenges and how to overcome them
• How optimize customer acquisition—including A/B tests you can try for yourself

Let’s dive into a summary of her customer acquisition best practices that you can implement today to reduce costs, increase the ROI of your marketing budget, and grow the number of customers you win for your business each day.

Planning for acquisition: leverage customer personas

When it comes to customer acquisition, you won’t get far if you don’t understand who you are trying to add to your customer database. To that end, buyer personas can be very effective in ensuring you are acquiring the right type of customers.

An example of personas from 99designs; each of these individuals has a different set of design needs and would purchase a different combination of products.

Here are some tips from Pam on how to work with personas:

• Focus on the personas where you are already seeing success.
• Uncover as much as you can about these people to help your marketing team understand what triggers and motivates them to purchase.
• Name your personas for easy and consistent reference amongst your team.
• Continually test and validate personas—they represent dynamic, living people.

Going through this exercise forces you to make choices about which potential customers you will and won’t focus on. This narrows the types of tactics and messages that are most likely to drive a positive response from prospective customers.

Building an acquisition team

Once you know who you’ll be targeting and how best to engage them, you need to make sure you have the right organizational structure in place. Whether you are creating demand (such as for a new product) or capturing demand for an existing solution, focus on the channel and marketing specializations that align with how you plan to engage prospective customers.

Generating demand

For instance, if you are looking to create demand for a new product, you may need to experiment with a mix of marketing channels to hit your customer acquisition growth targets. Maybe your team will try variations on PPC advertising, paid social media programs, or a referral program. The variations and the mix of channels will depend on your business, products, customers, and competition. Successful strategies, once you find them, will give you a sense of where to double down and invest headcount.

Capturing demand

If you’re already enjoying some inbound interest, your acquisition strategy. Maybe you’re enjoying a high volume of search traffic—adding an SEO guru to your team would be a great way to capitalize on interest and turn it into a longer-term channel. Or maybe you’ve got a great social following, and a social media manager with a paid advertising expert could turn social subscribers into customers.

Each channel should take responsibility for both new and existing campaigns. As part of that, the channel owners should always be watching for trying new campaigns that have the potential to turn into evergreen campaigns. In other words, once a campaign has proven effective, run it regularly to amplify the impact.

Reducing acquisition costs

Customer acquisition at scale can be costly. Determining how much you can afford to spend acquiring customers depends entirely on the value of each customer. To arrive at that determination, you need to call upon the right tools. Here are three tips from Pam on how to reduce your acquisition costs:

1. Analytics tools help you evaluate and understand your costs so you can avoid over- and underspend and better understand how your business works. That said, it’s more important to invest in the philosophy of analyzing costs than just investing in sophisticated tools. Think of analytics as a muscle you need to develop: you’ll get better at asking the right questions and finding answers the more you analyze data.
2. Free (or low-cost) channels are another tactic you can call upon to reduce your spend. For example, search engine optimization (SEO) and content make it possible for customers to find you. While it’s not completely free to pursue an inbound approach—you’re still making investments of time and content to generate good SEO and publish on third-party sites—it can often cost much less than outbound tactics. Keep in mind that you are more likely to attract potential customers initially by sharing information and content that is helpful to them rather than focused on your offerings .
3. Retargeting is another effective and lower-cost tactic. However, by retargeting, Pam isn’t referring just to display ads that follow you online. Rather, she means ensuring you do not pay twice for driving traffic to your site—using email, advertising, social, or other offsite channels. When a prospective customer visits your site, capture whatever information you can, such as email address, role or interests. This makes it possible to engage them proactively going forward rather than relying on them to come to your site again based on information and offers they come across in other channels.

Top customer acquisition challenges–and how to overcome them

Even once you’ve identified personas, honed in on channels that maximize the value of your acquisition budget, and started to build your team, running an ongoing customer acquisition strategy requires constant tuning and rebalancing.

It’s common to come up against three challenges around customer acquisition:

• Identifying the “halo effect”
• Ensuring enough data for confident testing
• Playing to your risk profile

Here’s how to recognize each of these hurdles and approach them, according to Pam’s experience:

Identifying the “halo effect”

When tactics aimed at a specific channel or program impact other channels and programs, it can be difficult to understand the true value of your marketing efforts. In other words, the benefit of your spend might extend beyond channel where you’re actually spending your budget. For instance, maybe you’re spending on search engine marketing and it’s causing a lift in other channels. Or perhaps you’re spending on Facebook ads but seeing a rise in direct sales.

While it can be hard to identify the impact, it’s worth your effort to isolate each channel and understand the impact one has on the others in your customer acquisition strategy. With a better understanding of the true impact, you won’t under- or over-value the impact of any one channel.

This is where it becomes important to develop a “test-and-learn” culture, with everyone galvanized around tracking, analyzing and learning from results. To that end, educate the marketing team on how to interpret A/B test results and create a strong partnership with the analytics team. This helps pave the way for the analytics team to invest in marketing’s success and makes it easier for everyone to agree on campaigns and tracking priorities.

Ensuring enough data for testing

Testing is valuable, but you need enough data to make it practical and worthwhile. To arrive at statistically significant conclusions when testing, you need enough data to conduct statistically significant tests. If you can’t collect enough data, Pam says, “go with your gut” and make the choice that’s right for you and your business.

Learn more about A/B testing on low-traffic websites and check out our sample size calculator to help reach statistical significance on your customer acquisition experiments.

Playing to your risk profile

All customer acquisition efforts are essentially risky because you there’s no guarantee they’ll work. One solution is to set aside a testing budget so you can get a sense of whether it’s worth the investment to pursue a certain tactic or idea. With that in mind, remember that the promise of some tools or tactics may sound too good to be true. Always be “truth seeking” and cautious when assessing options.

Optimizing your customer acquisition through testing

Because A/B and multivariate testing are central to effective customer acquisition, 99designs walked us through various tests they have run to increase conversion on their acquisition programs. All three test cases illustrate how simple changes can dramatically impact revenue and marketing ROI.

Retargeting A/B test: isolating the impact

Visitors to your site that leave without taking any action are actually a very valuable audience. These individuals already have some level of familiarity with your brand, and have browsed and considered your offerings once already. Retargeting is a paid advertising strategy that can bring them back to complete a purchase or other conversion after they’ve left your website.

99designs was interested in demonstrating the impact of retargeting ads on their website audience. Here’s an example of a retargeting A/B test, aimed at site visitors who exited without purchasing or subscribing to an email newsletter.

The test was broken into two groups – a control group that saw a generic ad and a test group that saw a brand-specific ad.

The impact of retargeting was an observed 20% increase in sales. In other words, this test result gave 99designs confidence that they would see a consistent lift in their customer acquisition metrics by investing in retargeting.

Email signup test: moving email capture higher in the funnel

As Pam mentioned, remarketing is about more than just advertising. Any channel that can bring visitors back to your website after they’ve already taken the time to learn about your brand and products is a potentially lucrative one. In this experiment, 99designs wanted to seize an opportunity to grow their email subscriber base so they could remarket over email as well.

Here’s a test showing the impact of moving email capture earlier in the checkout process. The test 99designs hypothesized was: “Can we capture more emails without negatively impacting checkout conversion rates?”

The test showed that the change did not negatively impact email capture. In fact, 99designs was able to capture 2.5x more email addresses with this approach, effectively opening a new customer acquisition channel. The company also decided to apply this to other channels, such as by capturing email addresses on top-performing blog posts.

Pricing page test: package recommendations

Pricing pages are always a pivotal opportunity to optimize in order to increase conversions or influence revenue. Of course, like with the email test above, it’s important for changes to not disrupt or cannibalize what is already working about this money-making page.

99designs had always highlighted its Gold package but wanted to understand the impact of further highlighting it—would visitors respond positively to a recommendation, or would it discourage them from choosing that plan? This test showed that simply adding a “recommended” badge drove a 21% increase in average order value.