Corey Talking to a Camera About The Marketing Channels That Work Best For Your Brand
Featuring Corey Pierson, CEO and Cofounder of Custora
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The extreme example here, no offense to our friends at Groupon but rewind five years ago and LivingSocial and Groupon were all the rage for every business. OMG. I can acquire customers cheaply. I care about CPA, cost per acquisition. Look at this thing. I run this promotion over here and I get all these new customers. It's so cheap.
The problem is, using an analogy like the baker, like, "Hey, I run this Groupon promotion. We gave 90% off. We lost a dollar on every doughnut we sold of all those new customers that came in and guess what? None of them ever came back because they really cared about a free doughnut. They didn't really care about me. That sucks because I lost money."
My CPA, my cost per acquisition was really, really low and it hurt my business a lot.
If you take a step back and think about all of the dollars that we spend on Google, on Facebook, on Instagram, on Pinterest, on Twitter, you name it, display, the whole ecosystem right now operates in a return on ad spend manner which is revenue. I spent this amount of ad dollars, I got this amount of revenue back.
It's really shortsighted because here we are, on the one hand, saying, I love loyalty. I love loyal customers. Lifetime value is so important.
On the other hand, we look into not profit margin, just revenue and we're only looking into the immediate return on those dollars. We know a Groupon customer's never going to return, but there's extreme variance in terms of where you get your repeat buyers if you look from digital medium to digital medium and even within a medium, campaign to campaign to campaign.
We have case studies of looking at affiliates as a great example.
Surprise, surprise, the customers that you acquire for the big promo like a rebate eBates kind of stuff tend to not be as good as the quality customers that you might attract from an affiliate that's maybe a bit more like if you're a fashion apparel brand that's really a solid fashion apparel blog. Your kind of people are shopping there and you might pay the same commission linked to them when they come aboard but then that customer repeats 10 times.
If you actually believe that the key to growing your business are good loyal customer relationships, then you have to factor in lifetime value in your customer acquisition marketing. There's just no other way to do it.