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Stumped for Strategy? Acquire 100,000 New Customers

  |  February 26, 2010   |  Comments

Do performance marketing, focus on growing the top and bottom lines, and then strategize in your spare time.

There's a common misconception in marketing that strategy always emanates from the top down. That companies need to go through rigorous planning processes to determine the appropriate marketing mix, brand strategy, and communications tone.

The largest of companies may have no choice. But if they're willing to offer some autonomy to their divisions, they would benefit greatly from taking a cue from nimbler companies' approaches to the "strategy question." Often, that approach has been: do performance marketing, focus on growing the top and bottom lines, and strategize in your spare time.

Sound cavalier? But what if it works? I've worked with companies who've not strategized much at all, who have gone out and successfully and directly acquired tons of customers using paid search, and who have mopped the floor with their more deliberate, deep-thinking competitors. Nimble and connected, in this assessment, often beat excessive, self-congratulatory positioning exercises, and subjective viewpoints of what the market will probably want to buy from you (also known as "research").

To be sure, these nimble companies usually started with a favorable combination of unique product lines, dynamic founders, out-there brand identities, and a willingness to innovate and listen to customers. It isn't like they had no strategy. But they probably never sat back, took a year's worth of deep breaths, and tried to come up with a "whole strategy." Always, the priority was growing the customer list, studying and perfecting the performance channel, and yes, bolting the strategy on the back end while counting the profits each month. In short, they were usually doing, while their competitors were thinking.

In the end, what is strategy? Isn't it "strategy" in online retail to let customer demand trends for different products shape your planning for next year's product mix? In software, isn't it the norm - after you've got your basic positioning figured out - to let customers request features and provide feedback on your beta? "Ship early and often" is the hacker's credo. That scares a lot of folks, to this day.

What makes so many companies reluctant to try that approach? I'm not sure I know. Maybe, if your "go-to market strategy" is taking a little too long to ferment, you should just, well, go to market.

Let's say you have this semi-functional Google AdWords account lying around. And let's say you focus mainly on simply making that channel perform better.

This is the promise of the performance marketing world. A not atypical profile of a company tinkering with paid search might have the following business metrics for Year 3: cost per acquisition, $18; new customer acquisition volume, 20,000. It so happens that this is the year that the paid search channel was just reaching the break-even CPA (define) of $18, and just reaching a point where optimization was making it a seriously attractive channel for the company. Two years later, in Year 5, the CPA had reached a very healthy $13, and new customer acquisition volume had hit 125,000. By reaching key tipping points in multiple aspects of the complex digital advertising auction, the channel's performance basically exploded sixfold over two years. Not even counting the invaluable library of learnings that now spur this channel forward to new heights, the acquisition of all these customers takes the business to a new level in several ways.

Think of the world of possibilities available if you just go out and acquire 100,000 new customers (at break-even or better) without entirely thinking it through. You have a fertile source of input into your product development. An army of offline word-of-mouth advocates. A more reliable channel for repeat sales. A testing ground for your e-mail promotions and seasonal offers. People who will provide written testimonials for your Web site. If you have customers with an international organization, then you also have friends you can have coffee with if you happen to be on a business trip in Argentina.

Think about it. If you're still stuck in planning meetings, there are no new customers. No need to figure out what type of e-mail to send them. No Argentina. No coffee date. I guess you can always log into Second Life and hope the barista is cute.

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ABOUT THE AUTHOR

Andrew Goodman

Goodman is founder and President of Toronto-based Page Zero Media, a full-service marketing agency founded in 2000. Page Zero focuses on paid search campaigns as well as a variety of custom digital marketing programs. Clients include Direct Energy, Canon, MIT, BLR, and a host of others. He is also co-founder of Traffick.com, an award-winning industry commentary site; author of Winning Results with Google AdWords (McGraw-Hill, 2nd ed., 2008); and frequently quoted in the business press. In recent years he has acted as program chair for the SES Toronto conference and all told, has spoken or moderated at countless SES events since 2002. His spare time eccentricities include rollerblading without kneepads and naming his Japanese maples. Also in his spare time, he co-founded HomeStars, a consumer review site with aspirations to become "the TripAdvisor for home improvement." He lives in Toronto with his wife Carolyn.

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