Discover how you can optimize your advertising spend, boost your ROI, and reduce your CAC with Optimizely’s senior strategy consultant, Brad Yee.
What you will learn:
- How to run effective landing page campaigns that boost the ROI of your digital programs
- Best practices for unlocking the power of symmetric messaging to acquire more leads at no cost
- What strategies we’ve seen to be successful at reducing CAC and sales support costs
2. ● Customize the widgets on your page
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● This webinar is recorded and you will
receive the link with the slides in the
next few days
● We will have time for questions!
Please submit them in the Q&A box
on the left side of the screen
● A short survey will pop up once the
webinar has ended—We’d love to
receive your feedback.
Housekeeping
3. Brad helps leading organizations use data
with purpose to drive quantifiable business
impact. He facilitates the transformation of
mindsets, drives the cultural shift for
product teams, and encourages the
replacement of digital guesswork with
evidence-based optimization.
Opticon Education Day Leader
Led courses at Opticon on Full Stack
Testing and Scaling Experimentation.
Selected experience
Customers
Brad Yee
Sr. Strategy Consultant,
US
Education & Certification
Duke University
Master of Engineering,
Engineering Management
UC San Diego
Bachelor of Science, Civil
Engineering
Areas of expertise &
industry
Strategy Consultant, Optimizely
Advise enterprise customers on
implementation of experimentation
programs through Optimizely’s
technologies
Digital Transformation Consultant,
Capgemini
Driving a multi-disciplinary project
team of IT and Business stakeholders
to develop a digital strategy
Roll-out and Enablement
Instills best experimentation
methodology practices with
teams to ensure strong
hypotheses and analysis.
4. 4
Strategy Consultant, Professional Services
Who we are:
Strategy experts provide insights, guidance, and best practices on our
Customer’s optimization program to ensure long-term success and
accelerate speed to value
Examples of what we do:
• Advise on optimization roadmap using Optimizely’s frameworks
• Provide expert ideation, optimization process, and program management
tools
• Define key experiment metrics, integrations, and audience types to be
implemented
Why Strategy?
6. ● What are Customer Acquisition
Costs and why do we care about it?
● What are the strategies and
examples to optimize the Marketing
Costs associated with CAC?
● What are the strategies and
examples to optimize the Sales
Costs associated with CAC?
● Did we find the best solution?
Agenda
Reduce Customer
Acquisition Costs and
Optimize Advertising
Spend
7. 7
What is a Customer
Acquisition Cost and why
do we care about it?
10. What are the levers experiment
opportunities that affect CAC?
11. 11
● Visually analyzes the entire
site’s opportunity to weigh
opportunity cost
● Allows teams to explicitly
align testing goals to
business goals; keeps ideas
tightly focused
● Strategic foundation for
creative brainstorming
*Orange = KPIs that can be
influenced by digital optimization via
Optimizely
Goal Tree
Revenue:
$2.0m
Revenue Per
Visitor:
$1.00
Average
Order Value:
$50.00
Average
quantity:
2.00
Average Price
per Unit:
$25.00
Conversion
Rate:
2.00%
Add to Cart
Cart
Checkout
Rate
Visitors:
2.0m
User
acquisition:
1.5m
User retention
33%
But we’re not here to talk about Purchases or Add-to-Cart!
12. 12
Goal Tree - Customer Acquisition Cost for E-Commerce
*Orange = KPIs that can be influenced by
digital optimization via Optimizely
Skip or move fast
13. 13
Goal Tree - Customer Acquisition Cost for E-Commerce
*Orange = KPIs that can be influenced by
digital optimization via Optimizely
Skip or move fast
14. 14
Goal Tree - Customer Acquisition Cost for E-Commerce
*Orange = KPIs that can be influenced by
digital optimization via Optimizely
15. 15
Goal Tree - Customer Acquisition Cost for E-Commerce
*Orange = KPIs that can be influenced by
digital optimization via Optimizely
16. 16
Goal Tree - Customer Acquisition Cost for E-Commerce
*Orange = KPIs that can be influenced by
digital optimization via Optimizely
32. 32
• Advertising through
paid marketing
channels
• Free trial programs
• Customer referral
programs
• Promotions
Focus on Optimizing Acquisition Costs
Marketing Costs
• Sales support call
centers
• Partnerships and
Alliances
Sales Costs
33. 33
Strategies and Tactics applied to Landing Page Optimization
Landing Page
Optimization
Symmetric
Messaging
Wording /
messaging
Unique hero
imagery
Design /
color /
iconography
Reducing steps
in process
Reduce
questions /
steps
Pre-fill data
Limit number
of choices
Communicate
Unique Selling
Points
Select/target
the right
USP’s
Refine the
messaging
Communicat
e visually
Design Intuitive
Navigation
Use a clear,
consistent
layout
Structure,
naming, and
order of
sections
Use
iconography
Market Products
Effectively
Test ideal
product
visuals
Use the right
review
systems
Find ideal
description
text / length
Build a Sense of
Urgency
Show
quantity left
Push
temporary
offers
Promote
buying
before set
times
Goal
Strategies
Tactics
37. 37
Strategies and Tactics applied to Landing Page Optimization
Landing Page
Optimization
Symmetric
Messaging
Wording /
messaging
Unique hero
imagery
Design /
color /
iconography
Reducing steps
in process
Reduce
questions /
steps
Pre-fill data
Limit number
of choices
Communicate
Unique Selling
Points
Select/target
the right
USP’s
Refine the
messaging
Communicat
e visually /
leverage CTA
Design Intuitive
Navigation
Use a clear,
consistent
layout
Structure,
naming, and
order of
sections
Use
iconography
Market Products
Effectively
Test ideal
product
visuals
Use the right
review
systems
Build
Trust/Social
Proof
Build a Sense of
Urgency
Show
quantity left
Push
temporary
offers
Promote
buying
before set
times
Goal
Strategies
Tactics
38. 38
Landing Page Optimization: Strategy to Build Trust/Social Proof
● Social-validation, “you're not alone in your
financial situation”
● Build as sense of urgency; people are being
approved right now
● Lots of money borrowed, we are definitely
trusted
● Additional social-proof and credibility
40. 40
• Advertising through
paid marketing
channels
• Free trial programs
• Customer referral
programs
• Promotions
Focus on Optimizing Acquisition Costs
Marketing Costs
• Sales support call
centers
• Partnerships and
Alliances
Sales Costs
41. 41
Classpass Win Back Experiment Example
Experiment Background
● Winback campaign offers a free re-trial period
targeting inactive members
● Experiment tested increasing the free trial
period from 1 to 2 weeks
Hypothesis
If we extend our winback offer by 1 to 2 weeks
We will see our reactivation rates increase
Because members have more time to experience
new classes
Measurement of success: Increase in reactivations
need to offset the costs with the increase duration of
the free trial
Enjoy 2 weeks freeEnjoy 1 week free
42. 42
Classpass Win Back Experiment Example
Optimizely Results Page Results
● Extending winback lifted
reactivations by 25%
>90% statistical
significance
25% Lift
Reactivations
(Free trial)
>90% statistical
significance
19% Lift
Retained
members
● But was this enough to
offset the costs with an
additional 1 week trial?
To uncover this, we need
to explore Customer
Acquisition Costs (CAC)
43. 43
Classpass Win Back Experiment Example
V1: Control V2: Extended Offer
Reactivated Free Trial 100 125 +25%
Cost of Goods (COGS)
Retained After Free Trial
Average CAC
44. 44
Classpass Win Back Experiment Example
V1: Control V2: Extended Offer
Reactivated Free Trial 100 125 +25%
Cost of Goods (COGS) $15,000
(avg $150 per customer)
$24,375
(avg $195 per
customer)
+30%
Increase in class
redemptions
Retained After Free Trial
Average CAC
45. 45
Classpass Win Back Experiment Example
V1: Control V2: Extended Offer
Reactivated Free Trial 100 125 +25%
Cost of Goods (COGS) $15,000
(avg $150 per customer)
$24,375
(avg $195 per
customer)
+30%
Increase in class
redemptions
Retained After Free Trial 80 95 +19%
Average CAC
46. 46
Classpass Win Back Experiment Example
V1: Control V2: Extended Offer
Reactivated Free Trial 100 125 +25%
Cost of Goods (COGS) $15,000
(avg $150 per customer)
$24,375
(avg $195 per
customer)
+30%
Increase in class
redemptions
Retained After Free Trial 80 95 +19%
Average CAC $187.50 $256.58 +37% relative
47. 47
Classpass Win Back Experiment Example
V1: Control V2: Extended Offer
Reactivated Free Trial 100 125 +25%
Cost of Goods (COGS) $15,000
(avg $150 per customer)
$24,375
(avg $195 per
customer)
+30%
Increase in class
redemptions
Retained After Free Trial 80 95 +19%
Average CAC $187.50 $256.58 +37% relative
Average CAC increased, but we should be more concerned with Marginal CAC!
48. 48
Classpass Win Back Experiment Example
Marginal CAC = $625 > ⅓ Lifetime Value (LTV)
Experiment is a Loser
V1: Control V2: Extended Offer
Reactivated Free Trial 100 125 +25%
Cost of Goods (COGS) $15,000
(avg $150 per customer)
$24,375
(avg $195 per
customer)
+30%
Increase in class
redemptions
Retained After Free Trial 80 95 +19%
Average CAC $187.50 $256.58 +37% relative
Marginal CAC
CAC to acquire the “next 15
members”
---
($24,375 - $15,000) /15=
$625
53. 53
• Advertising through
paid marketing
channels
• Free trial programs
• Customer referral
programs
• Promotions
Focus on Optimizing Acquisition Costs
Marketing Costs
• Sales support call
centers
• Partnerships and
Alliances
Sales Costs
54. 54
A/B Testing Referral Sign-ups
Conversion Rate
Symmetric
Messaging
Wording /
messaging
Unique hero
imagery
Design /
color /
iconography
Reducing steps
in process
Reduce
questions /
steps
Pre-fill data
Limit number
of choices
Communicate
Unique Selling
Points
Select/target
the right
USP’s
Refine the
messaging
Communicat
e visually /
leverage CTA
Design Intuitive
Navigation
Use a clear,
consistent
layout
Structure,
naming, and
order of
sections
Use
iconography
Market Products
Effectively
Test ideal
product
visuals
Personalize
to the
persona
Build
Trust/Social
Proof
Build a Sense of
Urgency
Show
quantity left
Push
temporary
offers
Promote
buying
before set
times
Goal
Strategies
Tactics
To increase Referral program usage, same CRO
principles
… but what if we wanted to test variable components
(e.g. Referral Incentive amounts)
55. 55
A/B Testing Referral Bonus Amounts
Hypothesis
If we increase our referral offer from $300 to $400 for
the referring customer in addition to $100 for the
new member (double-sided incentive)
We will increase new member sign-ups via the
referral program
Because members will have an even larger financial
incentive to refer a friend
*Measurement of success: Increase in new
member sign-ups need to offset the costs of the
increase referral offer
56. 56
A/B Testing Referral Bonus Amounts
V0 (Control):
$300/$100 Referral
Offer
V1:
$400/$100 Referral
Offer
Referred New Members
with Funded Account within 14 days
100
180
+80%
Cost of Referral
$300 for referral, $100 for new member
Average CAC
Marginal CAC
57. 57
A/B Testing Referral Bonus Amounts
V0 (Control):
$300/$100 Referral
Offer
V1:
$400/$100 Referral
Offer
Referred New Members
with Funded Account within 14 days
100
180
+80%
Cost of Referral
$300 for referral, $100 for new member
$40,000 $90,000
Average CAC
Marginal CAC
58. 58
A/B Testing Referral Bonus Amounts
V0 (Control):
$300/$100 Referral
Offer
V1:
$400/$100 Referral
Offer
Referred New Members
with Funded Account within 14 days
100
180
+80%
Cost of Referral
$300 for referral, $100 for new member
$40,000 $90,000
Average CAC $400 $500
Marginal CAC
59. 59
A/B Testing Referral Bonus Amounts
V0 (Control):
$300/$100 Referral Offer
V1:
$400/$100 Referral
Offer
Referred New Members
with Funded Account within 14 days
100
180
+80%
Cost of Referral
$300 for referral, $100 for new member
$40,000 $90,000
Average CAC $400 $500
Marginal CAC --
($90,000 - $40,000) / 80=
$625
60. 60
A/B Testing Referral Bonus Amounts
V0 (Control):
$300 Referral Offer
V1:
$400 Referral Offer
Referred New Members
with Funded Account within 14 days
100
180
+80%
Cost of Referral
$300 for referral, $100 for new member
$40,000 $90,000
Average CAC $400 $500
Marginal CAC --
($90,000 - $40,000) / 80=
$625
Marginal CAC = $625 < ⅓ Lifetime Value (LTV)
Winner! (Hypothetical)
63. 63
• Advertising through
paid marketing
channels
• Free trial programs
• Customer referral
programs
• Promotions
Focus on Optimizing Acquisition Costs
Marketing Costs
• Sales support
teams
• Partnerships and
Alliances
Sales Costs
64. 64
Optimizely Example: Chat Bot on the Sales Contact Pages
Goal
● Improve the experience of the Contact page
● Allow a known/qualified lead the ability to directly schedule a call with sales team
● Reduce funneling unqualified leads to our sales support team
Hypothesis
If we trigger the Drift bot on the Contact page and personalize the bot based on the firmographics, so that for each of
these firmographics we’d provide the associated options:
● Known/qualified lead: Provide an a way to contact and schedule a meeting with sales team immediately
● Known/unqualified lead - Verify visitor's country and then qualify
● Unknown lead - Qualify before putting them into contact flow
We will increase $ ACV, Lead + MQL volume in our pipeline (with the same sales workforce)
Because we will fast-track our most valuable leads directly to our sales team
66. 66
Optimizely Example: Chat Bot on the Sales Contact Pages
Variation - For Target Countries FY19 and Demandbase Employee 1000+
Results
● Grew $ pipeline across for
high-valued accounts in
Target countries
● Increase operational
efficiency - more booked
meetings per sales team
member
67. 67
We Believe in ‘Drinking Our Own Champagne’
COnsider skipping here
70. 70
Audiences
Areas
Metrics
Goal
Levers
Experiments
What are our KPIs / business initiatives?
How do we identify customer problems for those?
Where and what is the problem?
Who does it impact?
What solutions could exist?
Which is the best solution?
Experimentation
Framework
71. 71
Audiences
Areas
Metrics
Goal
Levers
Experiments
What are our KPIs / business initiatives?
How do we identify customer problems for those?
Where and what is the problem?
Who does it impact?
What solutions could exist?
Which is the best solution?
Experimentation
Framework
74. 74
There are many levers at our disposal to improve Customer Acquisition
Costs. As exemplified in the Goal Tree, visually mapping this out helps plan
our experimentation strategy.
Landing Page optimization is a simple yet powerful strategy to convert paid
traffic and optimize our advertising spend
Growth at any cost is a dangerous way to run a business. I challenge you to
better understand your marginal CAC in your acquisition channels and
programs
Experimentation is about finding the best solution (out of many potential
solution) that solves your customer problems; and generates sustained
revenue (lifetime value)!
Four Key Takeaways