Harvard i-lab | Customer Acquisition with Andy Payne

hi my name is Andy Payne I'm here at the Harvard eye lab tonight we're going to have a session on customer acquisition for startups and we're going to do a tour through a variety of different customer acquisition techniques we're going to talk about math and how to measure the effectiveness of your marketing and we're going to talk about how to apply Minimum Viable Product and Lean Startup techniques to your marketing and customer acquisition programs I hope you enjoy the video so in terms of kind of what we'll go through here we're gonna talk about customer acquisition for startups I am most certainly not going to speak for two hours straight so I've got a couple of slides here that I'll use to kind of frame the discussion I'd love to keep it interactive if someone has a burning question stop me and I figure what we might do is maybe sort of an hour hour and 15 minutes in kind of the session piece of it and then I will stay around till 8:00 or later or fo'c'sle still here if there's some piece of this that tweaks some interest and somebody wants have a deeper discussion or a smaller group wants to stay I'll be glad to do that so Jody said my name is Andy Payne my email address on my blog and from time to time I write blog articles and so if you go look at my blog you could probably increase or double my readership or triple it with this group so I figured I'd uh I dive in Jody has given me see if I can make maybe the fancy stuff work here I assume it can everybody hear me testing so Jody's touched on some of this and as I was putting these logos together I realized how old I was so worked at digital in the late 80s and early 90s my background is technical the co-founded open market the other way I found out how old I was as I was going and looking at logos and finding out as you go back in time they get more and more low resolution right pixel sir so open market was one of the first e-commerce companies we built the first secure transaction system for purchasing things online I'm the inventor on the infamous shopping cart patent and the open market patent portfolio which is a source of never-ending entertainment from the patent system I went on after open market to a found and I ran revenue which is a next-generation emarketing software company we built systems for sort of very sophisticated what we called longitudinal marketing programs where you might have a systematic way of interacting with and touching customers over time it was a company that was probably 7 to 10 years ahead of its time if you know some of the contemporary companies Marketo Eloqua and even HubSpot to some extent they've embodied a lot of the vision we started out are and then most recently I co-founded fan snap as a hatch project out of the venture from General Catalyst and fan snap was a was is it was acquired so it was and a company since is in a website sense a search engine for event tickets so you want Lady Gaga you want Red Sox tickets you want Kenny Chesney is the kid from West Virginia I was the one that always used the country music artist examples in all of our strategy sessions fan snap is your website for that so if you think kayak comm for event tickets that's that's fans time so since I think never one to be have much of a career plan so this is a this is an explanation in retrospect but probably starting about sort of five or six years ago after I got fan snap started I switched to more of a portfolio model as an entrepreneur so this is my fledgling portfolio companies these are all companies I have some sort of equity relationship with either as an advisor an investor or board member I was on the board of HubSpot I was there first outside director and left that board in July as we're tooling it over for a public offering and getting people that know SAR box and all that sort of stuff I'm also a limited partner and investor in three local venture funds and then sort of indirectly through them have a lot of other companies that I've involved with so my day-to-day is actually a lot like a venture capitalist so I say they tell my friends it's you know a venture capitalist job without the Monday partner meeting without pesky limited partners and a very very tough one woman investment committee why right why are we writing this check when we could get a new minivan it brings perspective it's actually not a bad investment test either right I mean my wife is you know she's not technical at all but she's been by living with me sort of immersed in technology and if I can't explain the idea to her why are we investing so it's a it's a fair test so what Jody and I were talking about doing a session here and talking about topics I immediately gravitated to customer acquisition and the way I want to talk about customer acquisition tonight is sort of embodied in sort of this which is a very common pattern in discussions I have with entrepreneurs as they are pitching their idea or whatnot which is there's always a bundle of enthusiasm for the service the product the offering the design the technology or whatnot and there is rarely equivalent enthusiasm for how are you going to get the world to know about what you're doing and it's it's you know the extreme case is I get serve a steady stream of these are people that send ideas for mobile apps I'm going to build a mobile app and get in the App Store well you and 750,000 other mobile apps are going to do that so entrepreneurs I think that have you know the passion on the product is exactly well placed but we are sort of well beyond for most products a time where build it and they'll just show up you have to sort of invest equally in how you're going to think about customer acquisition and the extreme version of this was at a very good friend of mine have a very good friend of mine who had a very successful sort of social gaming career and he was gonna do a new social gaming company and did do a social gaming company and I told him I said I think things have changed since you've been doing this I'm pretty convinced that that that my friend Steve you could build new games the challenge is going to be getting customers to come in so the extreme challenge I gave him which he ignored me on but that's our relationship is I said forget the games come up with clever interesting ways to engage customers because if you can find a way to get to customers I'm pretty convinced you and your team can build games form so that's a mindset of encouraging entrepreneurs to sort of think of more and more as does that customer acquisition becomes the sort of the gaming success and failure another example of it is hub spot hub spots early product was pretty bad but they did well and continued to do well the product is much better because they had the best customer acquisition inbound marketing inside sales team that I've ever seen on so you'll never have the perfect product but a good product can get you farther down the field you'll never have a perfect customer acquisition machine but a good one can cover up you know give you buy you time in other ways so if there's one thing that you leave tonight from its enthusiasm of okay let me take the energy I put over here on my company and be thoughtful about how I'm going to acquire acquire folks so I did not know that such a nice spread here this evening but the way I'm going to do this tonight is a tour through the buffet so this is not going to be a deep presentation into the intricacies of email marketing and social media marketing and all this other stuff it is going to be a sort of skim the trees across a bunch of different techniques and my goal here is to sort of get you thinking systematically for your startup about which of these different techniques which these different buckets will be applicable because they're not going to all apply equally to all companies there's no way I can stand up in the front of all of you and say here is your customer acquisition strategy because each one is different what would help me a bit though is to understand a little bit about what kinds of companies and products and solutions are present so I'll take a guess at some categories so how many folks are doing kind of a pure software peer website appear mobile app so you see what maybe 20% of the room how many folks are doing some business that sort of software powered or sort of software enabled so like uber or an air B&B kind of business where it's like the business is that but it's a website or a mobile app that makes it work okay probably another half probably should have given that one first and then that might have might be overlapping in the diagram here any folks here doing consumer electronics ooh okay couple brave souls probably some 4 or 5 anybody didn't just like pure product shampoo women's clothing not shampoo okay what's your product okay home furnishing decoration okay so um the the stuff I'm going to go through that that helps me sort of understand things things I'm going to go through are going to be and you might guess from my resume background sort of online centric so even if you're not if you don't have a software product or website is a still still help I think what I'm if you're selling a product through or service through a channel tonight's presentation might be interesting and amusing but I'm not going to get into sort of channel marketing and channel customer acquisition and that sort of thing so looking at this picture is making me hungry but I so the first place I want to start is and I'm an engineer so first of all you should never have an engineer staying up front talking about marketing and my marketing license was revoked years ago so but the reality is is marketing today is more and more and more and customer acquisition is about math right so the best customer acquisition folks and the best marketers and whatnot are spending more time in Excel and less time madmen style writing ad copy and there's that joke and marketing you know I know half of my dollars are wasted I just don't know which half with the internet you can find which half and if you're smart stop spending the other half and use all this math to kind of optimize what you're doing and the math for different companies is you know the what you measure for different kinds of companies is going to be business dif difference so if you have a straight product company you'll be talking like gross margins if you have a software company you might be talking about the ASP average selling price if you have a SAS company with a subscription model you might be talking about the monthly subscription if you are Amazon selling the Kindle you might be talking about how much the Kindle is sold for and how much all of the the books that are sold after you buy the Kindle go for but if I sort of take all of those all those different models the two places where there's almost always sort of a common denominator that applies to everyone which is almost always where you start and rarely where I see entrepreneurs coming in having thought about it are along these two vectors vector one is the lifetime value what is a customer work to me over the time of the relationship and the second one is what's the cost per acquisition how is it going to cost me to get that relationship started so for a physical product company lifetime value might be just the margin but actually might be more nuanced than that so one of the companies I've spent some time with here in Boston it's like your rest devices they're over that way somewhere they have a really cool idea for a a onesie that an infant wears that can measure respiration and the little thing that magnets in that talks bluetooth back to a something else so that you get sort of a baby monitor on steroids here's my baby I can hear see but I also tell what the breathing is they sell the system for that like you would buy baby monitor but guess what these onesies are washable but they wear out and kids outgrow them so the total lifetime value is the system plus sequence of onesies so thinking about it in those terms you know makes the business let's you be sort of a lot more thoughtful about the business so that's sort of the math and then of course the fun part of math is when the lifetime value starts to really exceed the cost per acquisition you've got yourself a real business and in the HubSpot board meetings we have for our for our board meetings we probably would spend half of our time in the board meetings talking about this right and for a subscription business like HubSpot you know this is driven by things like churn if it's a software model churn rate how long how fast do people unsubscribe and whatnot but when you can sort of like make this work your business starts to get really really interesting the other thing that this this this sort of lets you do is and as we go into kind of a couple different methods if you know the math you can translate between different methods so if you know you're paying fifty bucks or a hundred bucks to acquire customer using method a and somebody comes to you proposing method B you have a free initial framework to value the conversions on method B as you know you're already paying fifty bucks um so a good I'm going to sprinkle a couple of resources throughout a good resource for customer acquisition cost per acquisition lifetime value math is David's Cox blog is it called for entrepreneurs David's a partner at matrix of venture firm here in Boston and a lot of his companies have been software as a service company so all the stuff he's talking about has a little bit of that bias to it but there's some very good he's got organized in sort of sales marketing machine and business models or some very good stuff in there it's a very good resources for talking about customer acquisition um excuse me so to start to get into some of the details one of the other pieces that as I help teams think about how they're going to acquire customers I think is really important is to have a culture and mindset of experimentation it's sort of like we'll try anything once and if you've done the math and you have the analytics tools and sort of all that Freight in place you have a way to figure out whether experiments work or not so somebody comes to you with a new advertising method or a new banner ad strategy or a new kind of Java plug-in or a new email list that's a smaller this is where you can sort of apply Lean Startup and MVP thinking the marketing what's the smallest thing you can do to kind of test that and do you have the math in place to find out to learn afterwards whether it's something you want to sort of invest more in the other interesting thing that we're seeing I'm seeing sort of more and more examples of in the culture of experimentation is what some are starting called ghetto testing so anybody heard of ghetto testing okay nobody um so the extreme version is I think it was originally attributed to Zynga the online gaming company but it's it's the original version sort of goes something like saying as a game idea for running a new hospital you want to run a hospital hospital ville this is why my marketing license was revoked years ago I come up with stupid names so what Zynga does is they put in one of their other games a thing that says who wants to run a hospital and people start clicking on it and then when they click on it it says thank you for your interest we'll get back to you but it's the first step in is there can we even get anybody interested in running a hospital another example is a company that I that I met that had done a very successful presale on Kickstarter so everybody know Kickstarter and they did their sort of Kickstarter sale but then they wanted to sort of collecting orders after Kickstarter and what they did is they put up the whole water form and then just as you got to the stage where you going to enter your credit card they said thank you we'll be back in touch you know we've got a backorder um they did in a way that managed custom representations it wasn't it wasn't sketchy but what that gave them is it gave them you know as opposed to sort of a simple give us your email address or fully capturing the order it gave them sort of a test of people that would have if there had been a place to enter a credit card probably would have entered one so there's a bunch of interesting things and tell us examples to kind of get you in the mood is you're sort of thinking about you know what's that you know if you have a customer acquisition idea what's the MVP of it what's the smallest scrappiest thing you can do with the smallest statistically meaningful set of of data to see if you've got something and then if you do you can double down behind the math so to dive into a couple of a couple of the techniques this guy scares me that's why I put them up here so occasionally not so much anymore but a cage they'll run entrepreneur that says we're going to get our product out and they're going to buy a bunch of ads and today for most things but everybody knows what paid search is right so when you get the Google search results it's the stuff at the top and the side right people are paying for those links that's doing a marketing strategy centered on paid search and even banner advertising some extent is a pretty good way to do like a self-imposed cash ectomy you're just it just I can't tell you number of times it's just been like take your bank account and transfer it to the college fund of all the Google employees it just it just it's a great way to spend a lot of money um it's it's easy to test and you should write you know you can do small experiments take 50 bucks take 100 bucks take a thousand bucks whatever works for your budget but the real problem I think in a lot of paid search today is the people you are competing with so I don't play poker I have friends at play poker they go down to Foxwoods and when they say when you go to Foxwoods you're going to lose because the people around the table you do not know how good they are and they are all better than you and it's in most paid search categories it's very much like that the other people that are bidding on that page for your keywords especially if they're broad based keywords are professionals or at least you should assume they oh they've got tools they've got quant they know exactly how much they want to pay and if you're paying more than they are you're a sucker so something to try but you know do not just assume that you can I think for a lot of businesses assume you're going to be able to acquire your customers with paid search banner ads are in a similar category the reality of most banner ad things is the click-through rate is you know it's like scroll to the right to see where the decimal is it's just point o it just the click-through rates are horrible but again it's it's it's stuff that you can try is this is this right level of detail is if we go through like five or six other techniques like that one is that interesting okay and if folks have questions stop me so the second the second technique that that you hear a lot about and certainly was one of the founding premise at HubSpot is this notion of sort of inbound marketing which i put as a slash SEO search engine optimization most folks know what SEO is so it's it's as I was talking earlier when you search for good have had a screenshot of this but when you search for a Google search result there's the paid stuff at the top and the side and then there's the real search results in the middle and what really inbound marketing is so SEO is about managing your placement within those organic search results but the real premise of inbound marketing is using content to make it easy to get found so the exercise here the sort of you know take your product the inbound marketing exercise is usually I've got Product X I've got some product what are the things that people that are about to buy X going to be googling so I spend time with a friend of a friend a couple months ago that has a business here in Boston that does the the new sort of sprayed in insulation foam so the residential insulation standards all going up and you've got a you know achieve a level of air tightness and he's the stuff you sort of spray in the walls it expands and completely seals it so I was hoping to think about okay you know people that are that want to do that contractors and what not what are they googling for you know Boston spray foam wall fam spray foam spray foam techniques residential spray foam and then when you sort of translate that what you do is you say okay what are the blog articles website pages videos that I could produce and put on my website that are going to start showing up in the search results when people are searching for those terms and that's that is really the sort of the core of the inbound marketing exercise so it's specifically take your product or service think about the top dozen two or three dozen things people would be googling for and then think about what content should exist that's going to sort of grab those folks and I think you've if you do that you've got to also be mindful of the sort of the universe you're going into so when we were doing fan snap with event ticketing we looked at a lot of SEO stuff but guess what trying to get on the first page of the Google search results for anything that has the word Red Sox in it good luck right so you got a sort of also if you're going to go for this kind of strategy you've got also look at what is the pool you're swimming in of content and what it's going to be like to sort of compete in that pool the other thing you've got to do here is you actually got to write stuff you know it's not just a matter of like logging into a tool that's going to manage your clicks and manage your this and click in that and spend dollars you got actually like write a good article and get it on your website and then have patience as Google sort of crawls and indexes that to get it up so the best writing of course comes from the from you because you know your product and your company better than anyone else does some companies is they gotten scale outsourced or hire out so contract writers so the people can find say oh you know I've read an article on X Y or Z pay somebody to write it so there's a bunch of different sort of techniques there the tools that are that are they're useful here is Google Analytics which is a freely available website sort of traffic analysis thing and it will tell you where the website your website traffic is coming from and what content is going to on your site and then there's a related the related tools called webmaster tools that give you the same sort of information from a different perspective so if you're doing serious sort of inbound marketing eventually might get a paid tool like um spot but you'd start with these basic things saying ok we just wrote five articles on you know termites and this and that are they actually starting to sort of get some Direction get some weeds um yeah yeah go ahead um so I would I'm a fan of of ghetto testing that's done in a way that respects the customer right so you don't want to sort of like say you know place your order now and then just leave them completely hanging and say sorry I was joking but I would be thoughtful and it depends on what your product is about things that you could be doing now to gather interest build a mailing list bill they will get back in touch with you sorts that sort of thing um I would start doing it sooner rather than later because you know at least as soon as as soon as you can because some of these things take a little bit of time to gestate right you don't write an article you know a set of five or ten nice you know topical articles about your area of interest and put them up on your website and have them show up in Google search results this weekend right it takes time for that stuff to kind of kind of get through the system yeah because because I mean that because the other thing is is that is that you know Google lets you change your content right so if you go for if you go right now and you go google startup equity the top ranked page you'll find is a page on my website that I wrote five or six years ago about options and vesting and kind of also stuff I go update it and change it and that add links to it and I refined it and whatnot but it still sort of persists up there at the top and in fact I think for that kind of content Google rewards you for freshening it so that might be a case and again I don't know what your product is but it be glad to chat more more afterwards might be a case where you would might start with getting some key pieces of the content laid down even though you're not ready to sell the product yet and then as you get closer to selling you can change those pages at the bottom or you know add additional details or whatnot that make sense yes for example we have right right right so so the question was or the benefit of the audio the question was about if you sort of starting out from a from 0 miles per hour on your blog you know how do you get to like 5 10 or 15 miles an hour when you have zero readers so so I'll answer in two ways one is I'll say some of the things we're going to talk about to answer that and kind of kind of the part going forward but I think the initial in that sort of very beginning getting that seed crystal going a lot of it is basic stuff like friends and family and legwork and mailing things out to you know people that might be interested in other bloggers and and and whatnot we had in the very very early days of HubSpot I think we actually had to add a column to the customer list is like the very early days and the column said f OB and that meant friend of Brian Brian Halligan the CEO so a lot of it's just that sort of hard legwork of getting you know late your blog post write your article white write your web page and then who are 50 people that you can write a personalized contextual email to that might get their attention you know 48 of them are going to ignore you but to will pay attention and then the second part as I said will touch on some of the other things as we go through any questions about inbound marketing SEO before we go on so - you know I'm feeling a little old putting book suggestions in an internet acquisition customer acquisitions presentation but if you do like books and you like that format these are - I recommend the inbound marketing book is was written by the guys at HubSpot the new rules of marketing PR is written by a David Meerman Scott who and these books I think are in some ways the same style of what I'm talking about today which is they go through like a whole series of different techniques but it's a good what I find them sort of good for is is sort of yes you would be thinking about how is everything about blogging has to be thinking about social how should we think about Twitter it forces you to you if you go through it it forces you to think about the applicability of each mess and technique to your particular business so going on to social media social media of course is the hot one right now it's a sort of a couple of things about social media because this is this is social media marketing is probably a session in the evening unto itself and Jodi's not paying attention because if she were she would say oh that would be great we should do that but we just fine first I started is I think when people talk about social media they're really saying two things they're saying Twitter and Facebook those the only two platforms today that matter it's like Google - Bing right Bing is there but you know it just it doesn't matter right now in terms of in terms of your investment sorry Microsoft so the one thing I you know occasionally things come up like Pinterest that might be worth paying attention to the broad thing I'd say though is that the social social marketing is so dependent on what your product is your strategy for acquiring customers through social media for you know a company has one type of product is going to be completely different for another so it's very hard to make sort of like a general statement about that I tell two stories one is on we did do some interesting stuff at fan snap with social media because for those of you have ever bought an event ticket has anybody ever bought one Lady Gaga ticket or one Red Sox ticket no you you always buy and like go as a group so it's like a perfect example of how can use social media if you're in the ticketing business to have you know Bob learned that Jane just bought tickets to Lady Gaga concert and he might be interested in going as well and and that whole thing the other extreme this isn't quite a social media example but it's a story I think it'll help you understand is I was on the subway a couple of months ago and everything is what QR codes are right the little codes you scan that take you to something and there was a subway print ad for that said this might have been in New York it said got bedbugs scan here and we've got like Department of Health Information now who is going to stand up on a subway in full view of everybody else in the car I almost was going to just because I me and I do stupid stuff like that and scan a QR code like that there are a lot of products that are private right remember the dust-up that Facebook had years ago when they started sort of giving out too much information this was this was pretty early on about sort of purchases and whatnot of people freaking out like I don't want to see what other people buy so really things can vary a lot on on sort of how you think about how you think about social media one piece though sorry I keep whatever I'm doing that's making the audio go loud one thing that I think is starting to happen though is the social media piece in particular is making marketing and customer acquisition more and more of a real-time continuous operation and this is not a marketing operation center but in my head it is and I think this is what we're moving more and more toward so if you saw everybody here this the little Applebee's PR disaster last month was on reddit so everything's Applebee's right the restaurant so patron came in to Applebee's and uh she was a party six she Applebee's added the gratuity she's she was a priest and she wrote on it she scribbled off a gratuity and says said I'm not going to get this right so don't don't get don't you know don't be mad at me because I said something effective I give God 10% why should you get 18% a waitress took a picture of that posted it on reddit and as you might have mattered imagine that thing went crazy viral the signature was in it and was readable so the reddit detectives figured out who the priest was who her church was she was embarrassed called the Applebee's demanded everybody be fired they fired the waitress that posted the the receipt under the policy of you violated our guest privacy that's against our policy and like everything on the internet the sides line up right however you feel about this matter you could at two o'clock in the morning so that Applebee's started to do all sorts of stuff but it they posted this thing on Facebook and at two o'clock in the morning I don't know why I was awake I'm like looking at this thing and the comments to this to this feed are just rolling in as fast as possible it's like two o'clock in the morning seventeen thousand comments 17.1 comments and then and then some PR person at Applebee's like jumps into the middle and tries to say things to make the situation better of course they make it worse but you know that's an extreme example but what starting to happen is marketing in the social media world is becoming more and more of a real-time opportunity and problem right do you guys see the Oreo ad during the power outage in the Superbowl where they say it was it like you can still dunk in the dark they put it on together on the fly when the power went out so yeah I think a lot of your businesses are probably pretty far away from this but you're going to want to start thinking about things like you know if something somebody tweets something of that might be somebody's looking for a product that you could be a fit for why don't you reply to their tweet and how do you sort of find and track those tweets if somebody tweets something about a competitor is an appropriate way for you to kind of respond to that something's but somebody says something on Facebook or Twitter that's derogatory about your product or company how do you identify that right away and what should you do about it so the days of Mad Men marketing do your creative get your print order in get it in the newspaper get it in the magazine you know the decision was made eight weeks ago are shifting to something that looks more like this any questions about sort of the social stuff this is a network operation center so this is a company that were sort of runs a network yeah yeah so there's not an actual that's why I'm sorry I wasn't clear about that this is what I think if not literally some companies are going to start doing more and more virtually right so if you are an Applebees marketing manager and it is two o'clock in the morning and your facebook feed is with people who do you call them what do you do right they got processes and mechanisms to support that but they should yes right so questions about other tools are recommend for social media there aren't specific tools I recommend because there are so many of them right it's the it's it's there just so many different ones to choose from what I would say is that I think you know my experience they fall into two broad categories there's the folks trying to do cinnamon analysis and tracking like you know detect when somebody says something bad about you and alert it so they try to you know what are the negative keywords and and you know the customers cussing and their tweet they're probably pissed and you should pay attention to it and then there's other things I think the second broad category of folks like HootSuite which h oot suite which let you do things like sort of schedule and track your your tweets so you might you know some people use HootSuite might write ten or fifteen tweets but you don't put them up all at once you put them you have them sort of come out over you know five days or so and it helps you manage that but a week come see me afterwards that we can get into some more more discussion on that any other questions about this thing has a mind of its own either questions about a social media marketing a topic that could be a yeah that's a great point um so I wouldn't necessarily assume that Twitter and Facebook users are young and old people aren't on Twitter and Facebook so for example my mom is on Facebook and she loves it because that's the way she keeps up with all the pictures in the family you know my dad's on Facebook he's 78 he calls me up and says how's the new lawnmower I'm like I never told you got me well I know where you live in Facebook salt in the corner the picture called me up um and so what you do when you're in rural West Virginia with a DSL line and you're 78 years old nothing else to do god bless dad but but what I would say is I would definitely for whatever your customer acquisition or marketing problem is I would be mindful of the sort of the demographics so for example one of the things that we ran into with our sort of social marketing stuff at Vance nap was we worked with ticket brokers like a stickit here in Boston and Barry's tickets out on the west coast and really sir were selling their ticket Venturi the disconnect we started to find as we're trying to do more stuff on facebook is the average Facebook user was younger kind of to your suggestion but the kinds of tickets that the ticket brokers camped out on with a high dollar tickets you know they're not making bets on the five-dollar bleacher tickets they're making bets on the $25 Super Bowl tickets so that was one disconnect we had to you know we were trying to navigate of the kind of buyer that's on facebook is not the kind of buyer that has the price points that we have so again it's I think it's hard to generalize because the other effect I'm seeing at the low end is there's an anti-facebook trend now happening at the lowest end of the ages right so you know teenagers and young 20-somethings have completely opted out a Facebook altogether so I just I think you got to be mindful any other social media questions okay well this one is Auto advanced far enough along that I think it's already it's already probably made its point so occasi I will talk to folks and they they say that we have a viral marketing strategy my favorite is a company came to me and said we have a not only a viral marketing strategy but we have weekend we are viral marketing company and we will guarantee that your content goes viral like okay viral marketing is a tricky one it's exciting to talk about after it's already happened to you it's incredibly hard to plan for but here are a couple here's at least a sort of simple framework you can start to think about it and I think about sort of viral marketing in these sort of two general tracks the first track is the content right you just you get a video you get a blog post you have a picture of a cute cat you have something that just hits that human nature and gets forwarded and kind of explodes and goes around the tricky part they are sort of connecting the back to your business right so if you how do you produce a video if you sell widgets how do you make a video for that will go viral and will cause people to want to buy widgets it's tricky it's it's hard so I think this is this is just this is just hard the second kind of viral is where you have a product that has some inherent sort of viral ish kind of aspect to it like Dropbox right I do a presentation I want to share it with you you're not already on Dropbox guess what you're going to be on Dropbox after you click on the link where I say share the presentation and and that can either be those can be cases where the product self is inherently viral like Dropbox or you can you can experiment with sort of viral inducements or accelerations right so refer-a-friend get 50 bucks refer you know Dropbox has the one with a if you refer folks you get the extra space you know sort of incentive to have the extra storage space those sorts of those sorts of things are perfect candidates for experimentation so what did you know again if you've done the math you know you know what you would pay if one of your customer referred you to another customer my again it's hard to generalize this but my anecdotal experience has been the art there is navigating sort of the genuine genuineness of it right you don't want where they tend to fail is where you've got sort of existing customer a spamming his friends in hopes of getting 50 bucks off of off of one of them so this very fine line where you you know you cross over you sort of become am way or something a pyramid marketing thing you take on that negative connotation but the thing about that salt so it's all testable you can experiment with that and obviously viral marketing is closely linked to social media because it's Twitter and Facebook sometimes email but but the best ones are the public ones where your content and your and your stuff is getting shared any questions about viral marketing yes so a question is what's an average sort of conversion rate if you put in five email addresses how many people sign up again and she's like a foot broken record it's entirely dependent on your on your business and the nature of the product I think things like you know my senses products like a Dropbox where there's genuine value to the person you're inviting because if you sign up you can see the PowerPoint presentation I'm trying to send you have an extremely high sort of conversion rate if you will where other things where they starts to feel like you know that I feel like you're you know when I receive one of those emails from you it feels like you're kind of spamming your friend Network it's probably going to be very low any other viral marketing questions right so the question is has anybody tried to monetize the all the stuff we see in our Facebook feed and emails from times of these emails that can sort of forward it along particularly the religious stuff I have not seen that but it does remind me of a feature I wish Facebook had which is the Snopes filter how many people know Snopes so Snopes is a website snop es where it's got like sort of debunking of these chain emails and things that you get gets in around and I don't know maybe people gonna start on friending me but there's some stuff on my Facebook feed which is this viral stuff and it was you know some crazy political letter from five years ago or some crazy assertion and I'm the guy I'm the guy that's like cutting and pasting the link out of Snopes and putting it in the comments but what I wish Facebook had was the filter right it wouldn't let you post stuff unless it had had been cleared the Snopes filter these are the things I think about if I imagine myself running the world so how we doing is this a good is this a right level of detail okay email marketing so Ravinia had a big email component to it so i know a lot about email marketing oh sorry I can't see there's a post in the way right so so the question is who are the vidur's behind some of the coupon and viral marketing things that you see inside of your Facebook feed so when somebody buys something and shares a coupon winner I don't know offhand but come see me afterwards and I can get some more detail and if I can't help you then I can find folks that can you know what I would say there is it it is that sort of the Facebook app ecosystem is its own little world and just like companies think about a lot of companies think about what's my website what's my mobile app the thing I would also encourage them out it's not something that applies to every company is what's your Facebook app right what should you or what should your Facebook app be so at fan snap when we were talking to a lot of artists for example on musicians and whatnot their Facebook app should be their band schedule right if you go to you know your favorite band and you click on their the tab you should see the schedule of whether concerts are so what I think is also happening a little bit this another sort of direction answer your question is that some of those features are also coming in through sort of custom development so is the the companies have the resources and are developing out Facebook apps for their product are just incorporating those sorts of things in the in their app so um email marketing email marketing is an interesting one because it's it's like taking the transaction process the purchase process the customer acquisition process or whatnot and sort of like stretching it out or in some ways making a softer on-ramp so in the simple world you say do you want to buy my stuff customer says yes and they go from having not bought to having bought in one step and that's great if you can do it but a lot of customers aren't ready to make that big step in one leap so I think a lot of sort of the email marketing stuff that actually works is starting to think about a way a-and I think this might get to the gentleman's question earlier when they were the fellow would ask me questions about what could I do now before my product launches email marketing a way to start to gather you know a reason to get back in touch with people and a reason to engage them what doesn't work I don't think at all anymore is buying email lists with people that still do that amazingly the best way I think to think about email is you've got something you know you're you're getting people to you through viral or social media or inbound marketing or whatnot when they get to you if you can't sell them something or sign them up for your service or whatnot there is there's something else that you can engage them with to get permission to contact them later so is it an offer of information sign up for my newsletter of genuine value we're not going to spam you is it a case where your product is not yet available please email me when it comes back in stock or or is is available on you have a future feature coming please email me when it's announced but you know I think the exercise here when I talk to groups about email marketing is okay if you can get them to buy great if you can't what are two or three things we can do to sort of start that engagement you get permission you get an opt-in and the word you will hear so reading the books and see on the websites this sort of gap between signing up yes get back in touch with me and sort of consummating the customer relationship is nurturing lead nurturing lead development and it's that sort of okay I've got you signed up for my weekly energy newsletter on insulation now that your what now that you're sort of getting that is there a way I can get you to kind of go to the next step and buy my product or come to a seminar or go to webinar or or whatnot um so what else so really a lot of it really comes down to what's the sort of regular reason for contact yep oh so the question is do these work in the context of business-to-business I would generally say yes absolutely but relative to business the consumer in varying degrees right so for example in broad terms not knowing what the business of business is I might guess that Facebook is probably less interesting because those are sort of personal relationships and you're maybe not making business decisions in that context Twitter is probably a little more interesting because it's more of a sort of publicly visible sort of marketing thing email is often very important because many business the business transactions are what I call considered purchases there's a lot of investigation and learning and education and whatnot that goes into the purchase decision and email is a great way you know announcing your webinar and sending in the white paper and whatnot to educate the customer up to the point they're ready to purchase viral is tricky because in a business the business case what is the referral that's actually happening you're having like the CFO at company a suggest the product of CFO at Company B for an Omaha Steaks certificate may not work another ply yes oh absolutely yeah so the question is is there is there a sense up there the sort of value of an email opt-in but it's not you said getting email address I'm just being very precise I'm saying get an opt-in I mean you get the address and permission to get back in touch as well as what's the value of a like what I would say is this is the most sophisticated businesses know exactly what those are worth because they've done all the math so they know for example if you have a email program that takes somebody that opts in on your website say after having found your content and you have a way to nurture them and eventually convert them you'll have all the data you need at that point based on the probabilities of conversion the conversion rates and the time to know how much that opt-in is worth to you I don't I don't know of a way to know that generally without actually starting to sort of collect the data because it's going to be wildly different for every business similarly I think likes and shares on Facebook are the same way so I think of I think of likes and shares as a version of email marketing so if you like my page what you're sort of doing is opting in to me putting stuff on your status feed which is very similar to you opting in to let me send email right so companies companies again the most sophisticated ones know if I get somebody to like me right so I like Frank's Red Hot so Frank's Red Hot Sauce shows up in my facebook status feed and at some point I'm going to click on one of those links and I might do actually Frank's isn't a great example but it's more of a branding thing but you can imagine another example which is has a more sort of transactional conclusion and the sophisticated companies like email are going to know for a person that likes what's the probability they get through these three steps and purchase at that point they'll be able to value the like but it's I can't say a it's like saying what's through my stock price B right well you GM are you there's no way I don't know of any way to sort of universally say an email opt-in is worth X and the like is worth Y without knowing the business yes so the questions about Facebook custom audiences um I don't I don't have I don't have current experience with that sorry um because if the if you if the customer gets a surprising email um they will immediately opt out like I never signed up for this or worse they'll market is spam and then the the math PhD engine at Google will start to mark that category of spam right so if if you don't have good opt-in hygiene you send out an email to ten fifteen thousand people they're surprised to get that email because they didn't ever feel like they opted in some meaningful subset of people marked out as spam in Yahoo Google and whatnot then what starts to happen is Google starts to tip you over into I mean the spam stuff is not bited but they sort of tip you over to that category so the way I think about this sort of the opt-in and the first email you receive is it has to be sort of a genuine contract right I have to like get what I thought I was going to get from you in the way I thought I was going to get it so sometimes you'll see websites that say they say the opt-in upfront they say enter your email here we will send you one email when it comes back in stock and we won't email you again right they're very specific about about what you're signing up for and I think those are all good things to experiment yes question in the back um so the question is in these sort of creative ways to drive opt-ins um get it that's a tough one was it sort of in that genre of do you have any creative ideas for advertising but but you know and I don't mean to be flip but that's kind of what it is right it's it's it's that exerciser for your business what's the reason I can send you something later right um yeah we have a white paper coming out we have a webinar coming out all right let's say you have an idea for webinar and you haven't made it but it's a good idea for webinar before you produce it say we're going to make a webinar if you want us to send you an email when it's ready we'll send me an email give us your email address will send you exactly one email and then if you only get six people sign up for the webinar don't make the webinar right so that was not your question right so the question is whether the engagement metrics other developments for emails I think the big three our opens and the sort of technology so people understand that the classic approach for measuring whether an email is opened is you put a tiny little image and all the email systems will do this you put a tiny little image in the email there might be some more modern ways to do this but it's a general idea so when people open the email that image is loaded and you can tell that email is open so you can you can generally track opens though there may be so you know some - I'm not super current on the open tracking technology the second major metric is the call to action so if your email has a call to action in it do your users actually do it and what percentage of them do it and the third one is the unsubscribe right so if you send out if you send out fifty thousand emails some fraction of them are going to click the safe unsubscribe from Constant Contact or the stop sending the email button at the bottom and that's a good metric because that lets you figure out if you're hitting your email list too hard right so if you're starting if you're sending sending folks an email a day you might watch your opt-out rate go through the roof does that answer your question okay any other I'm like obviously it would be great to send emails about like you know like some other interesting story about some of the product products but you know God subscribes are typically like 10 per email so like how do you evaluate if that's actually creating value or not right so the question is is it is that you know if I can paraphrase it how do you navigate so the unsubscribe I want to send something out but but if I understand your question right I'm worried that maybe this sort of side content or whatnot will cause more people to opt out so there I'd say two things one is and this is sort of the engineering me you can you can model the math right so if you send out a hundred thousand if you'd like have two scenarios in 500 thousand what I rather have five thousand opt out and X convert or whether I have what I rather have ten thousand opt out and Y convert right so you sort of figure out you know do i what math sort of works better for you the second thing though as they say is is when your list gets big enough you don't have to send the whole thing to everyone you can pick a thousand or five thousand send it out see how it performs and then if it looks good and you're comfortable with it the opt outs are comfortable and the call to action is comfortable do it for the rest just remember you do it for the rest not the first group again right yes so the question is do find the social media and email marketing strategies less effective for the high-end I would say in general probably because as my general experience with the high-end is those as the dollar values go up you can afford a personal relationship that you can't afford you know otherwise so for example the things we saw at fan snap is the person that buys the $25,000 Super Bowl tickets is probably calling somebody and the person that's selling $25,000 Super Bowl tickets is happy to take the phone call they don't need it to be an email right so I'd say in general yes but I think those things you can do within email to kind of nurture and keep relationships going and provide information and content we'll do one more on email and we'll any other going once going twice okay we're almost done so my favorite one and the one I'm this is the last one make sure it's pretty certain is the last one um is what I call non-standard methods and it's probably not a good title for it but it's it's the notion of when I look anecdotally across my portfolio companies and other startups I work with there is a pretty strong correlation between success and having some clever creative unconventional interesting way to acquire customers so stated differently if the company's strategy for acquiring customers is banner ads and paid clicks tough but if they got some other interesting way to do it that often starts to get interesting so so one examples I've got a couple examples only one on a slide that I'll talk to the rest is a website greater for HubSpot so HubSpot website greater was one of the first things that ad our mesh built Dorma Shaw one of the cofounders and what it is is it's you go type in your URL and your it looks at your website runs a couple of basic like how well linked are you and which your Google ranking and do you have best practices and stuff going on it and gives you a grade and we all like to be graded right you know my 98 I you're only a 97 you know that that sort of worked out well and because you get the email address you get a reason to kind of get back in touch with them send you your website grader I'm not sure what we do today but those you can imagine a bunch of different options I'm going to grade your site again in a month has it gotten better has it gotten worse website grader is the lead gen engine for HubSpot so that's the Machine free shared people like to share their grade hey I ran my website I got an ad what did you get but it's most of the leads that the inside sales team at HubSpot is calling are coming from website greater door mesh went on to do some other things a twitter grader where it sort of grades you and you're sort of Twitter connectedness and a press release grader and whatnot but is a very clever way to offer sort of a free thing that people wanted to share so it was a viral like it had an email opt-in so you had an opportunity to get back in touch but it wasn't sort of a classic marketing program a couple other ones one is this company Sheryl holic that I'm an investor in sure oh sorry how can say the question is how can you as a customer use website greater or how can you translate that idea to you which is the oh I'm so yeah so so so I give two answers first of all you can certainly use website grader and you should for your own business the real point I'm making though is using website grader as an example of a clever non-standard non marketing way to acquire customers so you know if you have depending what your businesses is there a an idea like that you could do that would offer something small and free for people that they would be incentive to use that they might be inclined to share that is also in the context of you getting back in touch that's the real point I'm making the second one is shara holic Sheryl Hawk is a browser plugin and WordPress plugin for making it stupid easy to share things from your browser and from your from your blog it's not the biggest sharing application out there but it's what I call statistically significant has enough data flowing through it it's like Nielsen right Nielsen doesn't instrument every household for television they just instrument enough to get a picture and what's what share all it does is they tell you what are what's been shared off your website where is it getting shared to what's the demographic profile of people sharing it but they've done a bunch of clever things so get to the same spirit I think you might find share holic interesting but that's not the point I'm making the point I'm making is they've done some very interesting things for example when you install the plug-in in your blog it prompts you to and suggest you install the plug-in in your browser so it sort of cross-sells they take all of that sort of blog plug-in traffic that they have and use that to try to get folks to install the browser plug-in as well and then they might actually do some cover stuff in the other direction on what it's like you know if Sheryl holic we're sort of duking it out trying to buy ads to install this browser plug-in they'd be so this is the toughest one but I think this is the most powerful one but it also sort of falls into the sort of weird weird weird situation where hub spots marketing team is the only marketing team I know of we're actually new at that because it probably changed a little bit that has developer headcount right I mean as you can sort of think a website greater in developer terms okay so if it takes you three months to build this and your developer cost you X per year how you know that's that's you can think of that and identically as a marketing program but it takes some incredible sort of foresight and discipline to think of marketing in I'm going to market by writing an application kinds of terms so this is the this is the toughest one to generalize but I think in the end is the sort of most powerful one any questions about that I think I'm done done so I said hour and 15 minutes okay so email me double my blog readership any questions yes yes so the question is how to figure out which one works best without spending enormous amounts of time I think there it is a buffet Lean Startup mentality for each thing you think about what is the smallest thing I can do that prove something that's meaningful right what's the smallest ad buy you can do a Google to see if clicks work for you what's the smallest little email opt-in thing you can try to see if anybody even signs up right just build the email up and don't even put you don't have to put anything after it just like start collecting them right so that's that's the way I think about it's an MVP each each sort of dish in the buffet and then if you're taking a math oriented approach to it you can figure out where to Double Down yes well I think um so the question is if you if there's a delay sort of between the beginning and gate if I understood your question right beginning engagement and actually launching do you lose the customers I think you absolutely will to sort of some extent but what I'd say is um in general terms if you sort of approach it right you can still get sort of some meaningful customer engagement and interest invalidation in in that sort of middle and the example I would hold up as you know of that today is Kickstarter and pre-orders and IndieGoGo and all the comparables who would have thought that customers would be willing to pay for something they don't get for six months right now that doesn't work for everybody but it works for enough people for a given product to prove the products viability and market demand right so I'm up for the LIA console the little hundred dollar game console and I think I send up for it in November it's not going to ship till March so so I think there's an up what you may find is there's a core within that delay that's going to kind of grow with you and kind of live through it and if you can kind of use that to validate then you can be sort of fully ready to go when you when you when you ship and go live that does that help and the other will do two more and then I think we could probably switch to a smaller group yes right right right right so the question is about I think it's about sort of like how do you segment on the social media platforms like Facebook and and and some of the other things when you've got you know subgroups but you know when you put a message up it sort of goes to everybody if I understand your question right I think it's it's there's certainly if you're doing sort of advertising and sort of some of the commercial features on Facebook they've got sort of a ton of features just like Google for you to target so you know I would use those and and make sure you're sort of cleaving apart sort of different groups you care about you know beyond that if you can't control you sort of like post one thing that goes to everybody and you have no way of controlling that I think you've just got to be sort of thoughtful and mindful about you know sticking at a general level at that point but again I'm giving sort of an abstract answer and be glad to chat more afterwards we do one more yes yes right so the question is care calm and how these techniques the same are different in the healthcare space so care comm is based on wall fam it's founded by Sheila Marcelo when the best I think customer acquisition people here in the Boston area I don't think of care as a health care company as much so what care is is a way for seekers and providers of services in your home to find each other so I need a babysitter I need a pet sitter because we have a three month old puppy now that's a lot of work I need care for my aging mom I need house cleaner that's really cares so they are more in a market making business not so much a health care business so most of the things I've described here are all of them in the care playbook and they're doing all of them and they're probably one of the best companies that do these things in Boston my general occurrence I'm not a health care guy my general experience is that you know health care has its the complicated market you have insurers and the government that are paying for things and you've got to just be mindful of where the actual decisions are being made right because a lot of times the insurance companies are making decisions indirectly and that's driving things so why don't I I'll stop there if folks want to hang around afterwards come up I'll stay as long as folks want to chat but thanks for coming out tonight you

Channel: Harvard Innovation Labs

Views: 33,699

Keywords: Harvard Innovation Lab, Harvard iLab, Customer Acquisition, Andy Payne

Id: jhMciQc5XlE

Length: 74min 5sec (4445 seconds)

Published: Sat Mar 23 2013