How We Revamped Our Digital Strategy to Reduce Customer Acquisition Cost by 23%

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A few years back, we were working on optimizing our ad campaigns on Google and FB. We tried some experiments and made good progress. But after a point, we realized that all the A/B testing and other fixes were just moving our customer acquisition cost by delta.

So, we did what anyone else would have done in such a situation — we researched, spoke to colleagues and experts. They suggested some experiments, best practices, and hacks as per their experience but the situation didn't improve much.

That’s when we realized two things:

1. We had hit the classic “plateau of optimization” and if we keep doing what we had been doing so far, we will get the same results.

2. We were missing something fundamental in our approach. We probably needed a major overhaul of our acquisition strategy.

So, we started all over again. We moved from looking at metrics and improvements at a micro-level to looking at the bigger picture keeping our user at the core and then went backward from there to redesign our acquisition strategy.

Well, it worked for us and hence I thought of sharing it with the wider audience hoping some people might find it useful.

In today’s post, I will walk you through our step by step approach to create a digital acquisition strategy that helped us reduce our customer acquisition cost, effectively.

• The Overview
• Analyzing the current state
• The Competition Research
• The Plan
• Going Live
• List of Experiments
• The Result

A. The Overview:

We were a B2B company that provided solutions to online businesses. Users could use a web platform or mobile app to sign up. We had multiple acquisition channels (both online and offline) and like most businesses, we were trying to optimize our customer acquisition cost across channels and choose the right mix to justify ROI. CAC for us was the cost per onboarded user and not just the signup cost.

As I mentioned earlier, we ran multiple experiments to optimize digital campaigns. Our A/B testing with content, creative, landing pages, CTAs, targeting, bids, etc brought our CAC down by ~2% on a MOM basis but that wasn’t enough. We had to reduce our CAC by at least ~20% over a quarter to be able to scale up acquisitions. So, we decided to do a complete overhaul of our acquisition strategy & the first thing we did was understanding where we stood.

B. Analyzing the current state:

To understand where we stood, we had to analyze our ad campaigns and map them to business impact. So, we started the audit at two levels:

1.Campaign Level: Here, we looked at campaign construct and metrics and created an excel with the following details — Campaign Name, Campaign Type, Persona Targeted, Funnel Stage, Goal, Creative, Copy, Targeting, Ad Score, CTR, CPM, etc.

2. Business Level: Here, we mapped campaigns to the cost of acquiring and activating a user as well as the revenue we got from her. The excel covered — Campaign Name, Budget, Cost per Click (CPC), Cost per Signup (CPSU), Cost per Onboarded User (CPOU), Cost per Transacting User (CPTU), Lifetime Value of User/Revenue Generated(LTV), Retention Rate, etc

C. The Competition Research:

Understanding our competitors’ marketing strategy is a must before designing our own. Apart from other business-critical insights, it gives us a fair understanding of what all they are doing and helps us:

• Design a unique integrated marketing strategy that stands out from others — We can focus efforts on quirky ideas no one in the industry has done. For digital campaigns, it also helps to define the tone, USPs, creatives, etc.
• Figure out a niche our competitors might have missed — This could be a value proposition useful for a specific buyer persona or a specific category of the potential customers who haven’t been reached out digitally

Since we had done that for our business already, we skipped this and jumped to the plan.

(Competition Research is a critical element in drafting a successful business and marketing strategy. It is difficult to cover the topic in detail here so I would cover this later some time)

D. The Plan:

We had to get the strategy right to drive results. Here is a step by step approach we took to create our digital acquisition strategy:

1. Freezing communication as per the buyer’s journey:

We already had the communication part sorted. We had done brand research and had defined our brand positioning and USPs.

To make it easier for teams to use the same brand communication, we created a one-page document that described our brand personality, tone & voice to be used, and words/sentences to be used while covering the what (does the brand/product do), why (should users choose us — USP, Benefits) and how (to sign up and use the product) of our business.

This ensured consistency in communication across all our channels — social media, emails, website, print ads, brochures, etc.

The task on hand was to implement this on our digital campaigns as well. So, we mapped the communication with the stage in our user’s journey as shown below:

2. Deciding on the types of campaigns:

To decide on the type of campaigns for Web and App, we created a grid mapping campaigns with the prospect’s stage in the buyer’s journey.

3. Freezing Ad copies and creatives:

Now that we knew what we needed to communicate and what kind of campaigns we wanted to run at each stage of the buyer’s journey, we started getting into further details and fleshed out ad copies and creatives for all campaigns.

Here is the template we used for App campaigns (previously known as UAC — Universal App Campaigns). They are the only type of campaigns you can have for your App in Google. All you need to do is — upload creatives, video, and add text copy. Google will apply its ML algorithm to get you maximum acquisitions at minimum cost.

4. Campaign wise budget distribution & Lead projection :

We had some experience in the kind of campaigns that do well for us. So we distributed our monthly budget accordingly. To keep this simple, we took existing CAC as a benchmark and assumed that we will be able to reduce CAC by at least 3% MOM.

We took 3% because we had been able to reduce CAC by 2% so far and with the complete strategy overhaul, it seemed possible to easily hit a 3% CAC reduction.

For lead projection, we did a simple back of the hand math. Assuming that the budget would be constant each month and the CAC will reduce by at least 3%, we decided to spend the saved money to acquire new leads. For calculation, we took an average of past three month’s budget and lead count as our base and adjusted it for variations.

We decided that when our CAC reduces by 20% or when we hit optimization plateau again, we would scale our campaigns.

5. Sorting Tracking:

Tracking the source of each lead and mapping it to revenue and retention is a tedious task for most organizations. Normally, digital marketers track their campaign-level metrics (CTR, CAC, etc) and business folks track the revenue.

To be able to optimize acquisitions at scale, it is critical to have a complete view of the user journey. We should know what kind of campaigns give us high-quality leads, from where are the highest LTV users coming, which campaigns are giving the most retained users, how do our cost and revenue metrics look, etc.

We had been tracking multiple metrics on various tools. Occasionally, we would club them to get a clearer picture but it wasn’t efficient. So, we created a custom marketing dashboard that tracked leads right from sign up to onboarding complete, to purchase done and revenue generated — all in one place!

The marketing dashboard helped us with some great insights and made tracking smoother at a business level. I would highly recommend having this in place for every business.

6. Enabling Deferred Deep Linking for App Campaigns:

We had an App as well and so we implemented deferred deep linking in our App acquisition campaigns and our CRM campaigns. Branch.io beautifully explains deferred deep links as:

Deferred deep links will land your users right on the specific content within your app if the app is installed. In case, the app is not installed, it will let the user first install the app and then take her to the desired content.

Deferred deep linking helped us deliver a seamless and automated user experience across App and web. This improved our conversion rates and user retention.

I have covered this in detail in my post on improving the onboarding funnel by 200%.

Going Live:

We started taking the campaigns live one by one. Here is how we approached it:

• We identified our non-performing campaigns, stopped one or two of them at a time and diverted budget to the new campaign
• We waited for at least two weeks for new campaigns to stabilize and then started analyzing data to decide on the performance
• We repeated the same process till all the new campaigns went live

Slowly, we took new campaigns live in a phased manner to ensure the current lead flow isn’t impacted. It took us about one and a half months to take all campaigns live. We waited for another month for campaigns to stabilize and then jumped into the analysis.

List of Experiments:

While the campaigns were getting stabilized, we created a list of experiments we wanted to do to further reduce CAC. Some of the experiments were:

• Exploring vernacular to find out which language resonates well with our audience in various regions
• Exploring other digital platforms for acquisition & see if we can get better leads at a lower CAC from other channels — Linkedin, Quora, Affiliates
• Other regular A/B tests with landing pages, creative, targeting as an ongoing effort

Results:

Three months after all the campaigns were taken live, our cost per onboarded user came down by 23% and we scaled our acquisition efforts.

The CAC further reduced by 42%, 9 months after we took the changes live. This was a combined result of changes in our acquisition strategy, CRM strategy, and product enhancements. It was kind of stable after that with irregular spikes or drops depending on multiple factors.

So, next time if your A/B testing isn’t driving the desired results, just step back and see the bigger picture. Who knows you might also need a revived strategy?

Need help with digital marketing strategy? Just drop a note to ridhi@91ninjas.com to have a conversation.

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