three customer acquisition levers

Of all the formulas used to describe how customer acquisition works, this identity equation is as simple as it gets:

[Dollars In]


[Dollars Out] x [inverse of Acquisition Cost] x [Conversion Rate] x [Transaction Size]

That’s it. When you pay for a marketing campaign with the goal of driving revenue, then everything you need to know simplifies down to Acquisition Cost, Conversion Rate, and Transaction Size. Three distinct characters with unique personalities. Spend time with each of them, give them your love, and you can obtain an increasingly positive ROI (meaning the flow of [Dollars In] to your business grows faster than the flow of [Dollars Out]).

Acquisition Cost. Commonly [Dollars Out] divided by [Total Signups].

Acquisition Cost is the glamour queen of your marketing program – it’s the typical spend to get one person or company to sign up and express interest in your product or service. Acquisition Cost is relatively transparent, it’s straightforward to calculate, and you can flip switches to change it. Therefore, nearly everyone spends time on this lever first. Whereas the other levers increase through optimization, marketers tend to reduce Acquisition Cost as much as they can (technical note: we use the “inverse” of Acquisition Cost to refer to the fact that, all things equal, smaller is better).

Average marketers who starve Acquisition Cost wake up to see the inflow of new customers has suddenly dried up. Great marketers, on the other hand, realize that Acquisition Cost is highly dependent on the other two levers. The three work together: if you cheapen your inbound traffic by flooding Signups with traffic from lousy sources, you can starve Acquisition Cost quickly, but don’t be surprised when you can’t convert and monetize this lower-quality traffic.

On the other hand, you can effectively lower Acquisition Cost with honest effort. One tried-and-true method is to perform keyword expansion on your campaigns. By targeting more long-tail keywords, you can simultaneously lower Acquisition Cost and retain quality traffic. Another subtle method is to increase free sources of traffic to your site. Sources of free traffic include word-of-mouth referrals and high visibility in search engines. These have the benefit of increasing the [Total Signups] without increasing [Dollars Out]. These can be especially good campaigns to build out when you have some time but no budget to spend.

Conversion Rate. Commonly [Total Customers] divided by [Total Signups].

Conversion rate is the workhorse of your marketing program – broadly speaking, it’s the number of people or companies who choose to pay you from among those who express interest. You can have a major impact on ROI by increasing Conversion Rate, but you have to spend significant time testing and optimizing to enact lasting improvements. For each industry, the number of sub-steps from Signup to Customer varies dramatically. This is the proverbial customer funnel that forms the foundation of Conversion Rate.

At LogMeIn, we studied the following: [Signup] to [Trial] to [Quality Trial] to [Customer]. We invented a [Quality Trial] metric to mark high-usage trials once we observed they were more likely to purchase. Of course, you can just as easily apply sub-steps to an offline product. For a candy store franchise such as Lolli and Pops, you may try to acquire cost-effective foot traffic in lieu of signing people up: [Walk by Store] to [Enter Store] to [Customer]. You ought to discover and optimize campaigns around sub-steps that are relevant for your business. Multiplying all sub-step rates together yields Conversion Rate in its entirety.

Average marketers will focus on the overall ratio and ignore intermediate conversion steps. However, great marketers strive to map out, measure, and experiment with various ways to improve on midfunnel metrics. Furthermore, some marketers increase Conversion Rate by reducing the overall number of sub-steps required to convert a Signup to a Customer. However, don’t confuse reduction in the actual number of sub-steps (such as implementing a one-click purchase process) with reduction in tracking existing sub-steps. Reducing steps works when you can identify specific steps in your conversion process that contain unnecessary friction.

Transaction Size. Commonly [Dollars In] divided by [Total Customers].

Transaction Size is the shy cousin of your marketing program – it’s the number of dollars you receive from a typical customer. When there’s a change to Transaction Size, everyone across the business feels it quickly. Honestly, given the opportunity for upside on revenue, I’m not sure why Transaction Size doesn’t figure into marketing strategy discussions more frequently. For instance, pricing is a very complicated matter, yet entrepreneurs and marketers alike often spend little time on it and leave tremendous value on the table.

Many people believe that Transaction Size is a by-product of your target market, difficult to directly control, and risky to mess with. Feed Acquisition Cost and it will bounce right back to its old shape, Conversion Rate slowly and steadily improves with effort, but overreach with Transaction Size and you may lose a segment of your market forever. However, great marketers find a way to test product bundles, add-on purchase incentives, and new price tiers. They uncover ways to increase Transaction Size without jeopardizing the underlying business.

Remember, the healthiest way to drive a positive ROI is to have a superb product that fulfills a critical need in a large and growing market. If your product stinks, the three levers won’t deliver for you no matter what you do. But if your product or service is promising and you’re willing to experiment and live by the results, then spending time individually optimizing Acquisition Cost, Conversion Rate, and Transaction Size will be fruitful to your ROI and your bottom line.

agents, ninjas, honchos: three types of advisors

Startups at all stages benefit from the wisdom of advisors. These people typically complement the management team in some meaningful way. They are not on the board, so their advice is merely guidance. Still, if a founder picks the right advisors, she will receive a wealth of benefits. Advisors can serve as:

  • A sounding board to discuss product roadmap, partnerships and channel arrangements, personnel issues, and strategies for various departments.
  • Qualified eyes to vet opportunities before they go to the board.
  • Connectors to talent when it’s time to hire.
  • Big names that offer credibility during fundraising.
  • Future board members. Time spent advising is a great opportunity for the founder and advisor to audition each other as potential partners.

There are several advisors out there who provide little value. Everyone wants to be a part of — or find — the next big thing. A founder with a good idea and solid strategy will have her pick of potential advisors in exchange for equity. So, how do you decide?

There are three basic types of advisors, each with their own strengths. A good management team will select advisors from all three types and focus on what the startup needs most.

Honchos – The Industry Veterans

Like the name suggests, these are the big dogs. Honchos are the veterans of your industry. They know the ins and outs of your business, and they typically know where you’re headed before you do. They bring credibility to a venture that may be trying to gain momentum, and that credibility could be just what a founder needs to rise above the noise. For this reason, honchos are particularly beneficial pre-funding.

Honchos are found by looking vertically. Who is the best in your industry? Everyone probably knows their names. Ask around and gauge people’s impressions. If having a particular person associated with your company impresses everyone, chase that person down and make it happen.

Unfortunately, honchos are typically the most expensive advisors and will devote the least amount of time to you and your company. Honchos typically require meaningful equity compensation. Plus, it’s possible they may be working with your competition. Remember: When you bring on a honcho, you are paying for her name more than her time.

Ninjas – The Functional Experts

These people are the functional experts who can swoop in and help with particular business challenges. They have the largest variation in compensation, and they may advise long-term or for a set period of time until one particular problem is solved.

Ninjas can help you optimize an aspect of your business that you are struggling with. Founders can find good ninjas by searching for leaders in particular functions. Who has experience finding operational bottlenecks? Who is the best at marketing, finance, or whatever happens to be the most pressing issue? Ninjas can be helpful at all stages of a company. Ask for their advice and offer them equity when their eyes light up with enthusiasm.

Ninjas can add tremendous value to your company, but don’t become too reliant on them. They are still just advisors; they aren’t running the company. Beware of know-it-all ninjas who don’t know when to get on board or how to step out of the way. Ninjas may prefer equity or cash depending on the stage of the company and the length of the engagement.

Agents – The Connectors

The agents are the connectors. They probably don’t know — or care — much about your business model or technology, but they know a lot of people. Because they have a good idea of who will click, they are great for finding a tricky management hire or top-notch developer.

Agents are often investors, journalists, consultants, recruiters, and other cross-company professionals. They could either have big, public reputations or operate under the radar. Some of the best agents don’t maintain LinkedIn profiles. Either way, they probably know some important people you won’t be able to find any other way.

Typically, agents are more beneficial when companies are slightly bigger. They are the ones to help you fill out your employee roster or land key partnerships, so it’s usually good to have financial backing already. You can find them by asking around (and sometimes they find you first). Agents tend to have a big network across industries. They sometimes take equity but may prefer cash compensation.

Every startup should have a variety of advisors. They will point out solutions the founder can’t see, offer credibility, and make connections that couldn’t be made otherwise. Be wise about how much equity you offer; pay an advisor only as much as you believe justifies the value added to your company. Look far and wide for a healthy selection of the three types so you aren’t building the company by yourself.

This article originally appeared in “Up and Running Blog” and a link to the published post is available at:

poor pricing kills startups

Founders don’t spend enough time examining pricing. They’re too busy working on more important issues such as releasing version 2.0 and raising enough capital to keep the doors open. Brilliant entrepreneurs who build useful products generate substantial value, but in order to capture this value, they must implement rational pricing strategies. If you’re one of these entrepreneurs, here’s a quick guide on how to get started on pricing and avoid the most common traps:

First, study your competitors. Don’t reinvent the wheel. Even if you’re stronger, faster or prettier, it’s safe to say your competitors have done some homework already. Research competitive products’ websites and go through their purchase processes. Ask some of your prospects or beta users how they evaluate products or services in your space and what their decision flow is like. Is the customer accustomed to modular or all-in-one pricing? Are there price tiers? How steep are volume discounts? Note surprises and nuances that apply to your business model.

Next, launch softly with a high “introductory” price. The concept of an “introductory” price is powerful because it grants leeway for adjustment, yet also creates a sense of urgency that drives business through the door. Circulate this price freely among beta users, email subscribers and other ready-to-buy prospects.

Your introductory price should be enough to cover costs, but there’s no need to stop there. Consider pricing your product at the high end of your comfort zone. Although it’s hard to increase your prices once they’re in circulation, you can readily reduce them. Furthermore, a high introductory price sends a signal to the market that you have a quality product.

At LogMeIn, a company I used to work for as vice president of online marketing and operations, we priced an iPhone app at $39.99 back when most apps were less than $2. Despite some initial complaints, enough customers accepted our price point that the software became a Top 20 grossing app.

Over time, test a cross-section of lower price points. Once you’re comfortable that prospects understand your pricing model and your price point is in the right ballpark, you can periodically lower your prices through one-time discounts and product bundles. It becomes easier to fine-tune your pricing as volume increases.

One handy way to price test is to divide your prospect email addresses into random buckets, issue coupons and measure total revenue generated. We once tested four coupons for LogMeIn Pro: $59.95, 69.95, 79.95 and 89.95. Customers reimbursed the highest proportion of $59.95 coupons, but the $69.95 coupons generated the most revenue, so we lowered our price accordingly. If lacking a big prospect database, you might perform a similar test by striking through old prices on your purchase page, offering new prices each week for four consecutive weeks, measuring the revenue generated, and tweaking appropriately.

Finally, examine pricing attributes in the context of your overall business:

– Published pricing is a blessing and a curse. This applies primarily to B2B companies. Price awareness lowers the friction for silent prospects who are close to purchasing, but it also diminishes your flexibility. If you choose to publish pricing, you can avoid boxing yourself in by requiring expensive price tiers and high-volume customers to contact you for information.

– Free and freemium models drive growth at the expense of short-term profitability. If you can afford it, consider giving away parts of your product or service for free. Explore capacity based freemium models, which require customers to pay beyond a usage threshold, as well as feature-based freemium models, which provide free basic features yet charge for premium features.

– A little grace goes a long way. You don’t need to immediately penalize customers for exceeding price tiers or breaching license agreements. To your customer, there’s nothing worse than logging in to find a big red X or coming back from vacation to realize service has been discontinued. Utilize grace periods and friendly messaging to keep customers happy so they become evangelists and refer more customers.

This article originally appeared in “The Accelerators” blog of the Wall Street Journal.  A link to the published post is available at:

three flavors of freemium

You wouldn’t think there’d be much of a difference between natural vanilla and vanilla bean ice cream, but for some reason, parties are more exciting when the host rips out the Haagen-Dazs with the little black specks. Freemium models are like vanilla ice cream, most of the time we lump them together and consider them equal, but a further exploration reveals subtle differences that make some types more appealing than others.

First, there’s the “capacity-based freemium” model. This is the strongest known freemium model. If you offer capacity-based freemium, your customer can immediately get her foot in the door and start using your fully-featured product or service for free. Your customer only incurs costs when her need scales beyond a quantitative threshold for capacity, usage, or number of users. Simple examples include Dropbox (at least 2 GB) and HipChat (first 5 users).

Alternatively, there’s the “feature-based freemium” model. Even though it’s weaker than capacity-based freemium, it’s easier to build into products and more widespread. With this model, your customer can immediately use some version of your product or service completely free. However, he or she must pay to use additional features or functionality. Classic examples include LogMeIn (free remote access, pay for file transfer capability) and Skype (free VOIP calling, pay to dial out).

With both of these models, upgrade price tiers are often (but not always) correlated with cost. Large deployments in the “capacity-based freemium” may be more costly to the provider. Similarly, premium features may require additional infrastructure and incur higher OpEx. However, your customer is oblivious to nearly all of this. Here are three reasons “capacity-based freemium” is superior as far as your customer is concerned:

– With “capacity-based freemium” you only need to solve ONE customer pain point, but with “feature-based freemium” you must solve at least TWO customer pain points – one drives free adoption and the other upgrades. Oftentimes the customer doesn’t fully understand or recognize the second pain point until later. (If the second pain point isn’t acute, the company suffers from low upgrade rates.)

– With “capacity-based freemium” it’s easy to alter the pricing model. The threshold is typically defined by a number (e.g. 5 users, 50 GB, 10 groups) that can slide up or down with minimal coding and messaging. The impact of this sliding scale is easy to model out based on data previously collected. On the other hand, “feature-based freemium” requires flipping a switch on or off. Suddenly choosing to start or stop charging for a particular feature may result in drastic economic consequences.

– With “capacity-based freemium” it’s more natural to incentivize referrals. If customers Boring Barry and Average Anne realize they can get “more of the same” without whipping out a credit card, then why not nudge a friend or two? They anticipate using more capacity and appreciate it. However, they might care less about new features that they don’t understand.

Observe that these freemium models aren’t mutually exclusive. Some companies may slap a “capacity-based freemium” model on the primary use case and “feature-based freemium” models across an array of features that appeal to a subset of the core audience. Some premium features are popular, inexpensive, and have high conversion rates. Others are elite and priced to a high-end, yet dedicated customer segment (with a low conversion rate). Unfortunately, it’s the low-price and low-conversion features that exhaust resources and kill companies.

At last, the French vanilla of the freemium world is the “use case freemium.” This overlooked and underused freemium model refers to products or services which are either free or paid based upon how the product is used. The product functionality may be identical across use cases. Examples include:

– free for non-commercial use (often with a label indicating “this is licensed for non-commercial use” so as to embarrass out-of-compliance companies)

– free for schools (perhaps a dot edu email is required)

– free for certain distribution channels, and

– free for non-profits.

Fortunately, these models are straightforward to test and implement. On the other hand, customers can cheat these systems fairly easily. Cheating is only a problem if your product or service is expensive to deliver; after all, cheaters may be evangelists and future customers.

crowdfunding 101: pros and cons

Private equity, the domain of Vanderbilts and Warburgs, brought a new form of financing to the 1940s.  With all its large minority positions and lucrative fees, venture capital hit its stride in the 1970s.   The turn of the century popularized the image of the brilliant, yet narcissistic independent angel investor.  Now, with the recent JOBS Act and a nudge from Capital Hill, will 2013 will be the year of crowdfunding?

As startup costs decrease and information flows more freely, each generation brings a suitable new form of fundraising.  Crowdfunding is the latest in the pantheon of inevitable funding innovations.  Outside funding from non-accredited investors is not quite legal in the US (sites such as Kickstarter and GoFundMe attract funding for projects with no promised equity) but this will soon change.  With the advent of crowdfunding, more entrepreneurs will get funded and more investors will share in wealth creation, so what’s the downside?  It’s tough to tell at first…

The best starting point is to understand how the industry is likely to evolve once crowdfunding hits the mainstream.  (For now, scholars, legislators, investors, and entrepreneurs will beat themselves senseless over the relative weightings of the associated pros and cons.)  In a world with crowdfunding, here are three new realities:

1. Entrepreneurs come up with less initial capital from themselves, friends, family, and angel investors.

  • PRO– Crowdfunding minimizes the tedious fundraising process (and its associated time and cost) so entrepreneurs spend more time where it counts, on the business.  Scrappy entrepreneurs from humble means are no longer disadvantaged when trying to launch companies from scratch.
  • CON – By putting less of their own skin in the game and no longer facing investors one-on-one, entrepreneurs lose out on the truly valuable step of convincing others.  Entrepreneurs collect less pointed feedback from critics so their early business models aren’t honed as well.

2. Significantly more investors participate in early financings with smaller stakes apiece.

  • PRO – Anyone who is interested and has a little capital to spare can participate in financings.  Ultimately, the industry shifts from “rich gets richer” to “smart gets richer.”  Diversification of the investor base is good for management, who receives a wealth of points-of-view but is no longer beholden to a small number of parties.
  • CON – Crowdfunding information is highly asymmetric with respect to what VCs and (to a lesser extent) angels obtain in diligence.  Investors are susceptible to fraud or just plain incompetence.  Since they’re further removed, investors find it difficult to obtain the necessary data to make smart decisions.  Some investors won’t understand many of the risks associated with crowdfunding.

3. Many more ideas get funded.

  • PRO – Complex, difficult, and niche ideas get funded.  Entrepreneurs not constrained to 5-7 year payback windows can pursue models with high creativity, democratized invention, and positive externalities in society.  Unusual companies (such as Copenhagen Suborbitals, a Dutch space company sending humans into orbit) have the opportunity to form, recruit sharp minds and push boundaries.
  • CON – Crazy ideas get funded.  More ideas get funded today than can possibly return capital, but with crowdfunding the percentage of successes markedly decreases.  A lion’s share of crowdfunded investments will never make money and investors will be out-of-luck.  While small, fragmented investments limit the catastrophic risk to any single investor, too many failures will give crowdfunding a bad rap and prompt regulatory tightening.

Crowdfunding in some form or fashion will inevitably increase over the next few years.  Companies requiring stealth or huge amounts of startup capital may continue to be funded in more traditional ways.  Venture capitalists will still plug the funding gap for growth- and later-stage companies.  However, in the immediate term, crowdfunding is poised to alter the entrepreneurial ecosystem significantly – just like angel investing, venture capital, and private equity before it.

This article was originally commissioned by the Stanford Center for Entrepreneurial Studies.  A permalink to the published article can be found at

midfunnel metrics matter

Connecticut is famous for a long stretch of congested highway that’s perpetually under construction. Anyone from Rhode Island who takes a holiday weekend in New York drives through Connecticut unless he or she is seeking the fall foliage of western Massachusetts – or is otherwise directionally challenged.

So how many Rhode Islanders visit New York each weekend? Not many (most of us stay put). You might find out by counting all the Rhode Island license plates you find across New York State. But if you’re pressed for time, simply count the cars entering Connecticut from the eastern edge. If you subtract the cars that exit the highway just beyond the border for Foxwoods Casino, there aren’t many other reasons to enter Connecticut. You’ve discovered a reasonably precise proxy variable – but do you trust this number?

Most companies initially focus on optimizing the “top of the funnel” because it’s easy to observe and measure. (Possibilities include page views, registrations, signups, downloads, and new subscribers.) These metrics provide the largest sample sizes; however, they suffer the accuracy problem. They don’t necessarily indicate actual value. Have you ever turned on a campaign that generated a flood of leads with zero purchases? This happens frequently with push marketing, co-registration, and broad campaigns.

On the other hand, some companies shift to the “bottom of the funnel” and endure a different problem. (Sample metrics include transactions, customers, revenue, and bookings.) While these are the ultimate objectives of your customer acquisition campaigns, they typically suffer the precision problem. You may notice blocky or clustered data. For example, suppose your hardware site purchases an AdWords phrase: “Phillips screwdriver for real cheap.” Your 20 monthly clicks may result in 0 purchases, but does that mean you should bid $0.00/click? And when Boring Barry or Average Ann purchase 500 screwdrivers off this link tomorrow, should you suddenly bid a thousand dollars per click? “Long-tail campaigns” with limited data are particularly susceptible to clustering. Furthermore, many bottom-of-funnel metrics suffer time lag – marketers must wait through sales cycles to observe enough data to make optimization decisions. Especially for B2B companies, these sales cycles can last several months.

So what’s the solution to this tradeoff between accuracy and precision? You must identify midfunnel metrics. These are metrics that yield large sample sizes and are quick to be observed, yet are reasonable indicators of actual value or future purchase intent. At LogMeIn, we created a “quality trial” metric to describe someone who downloaded the free service and subsequently performed one remote session. 15Five studies trial users who file that first report. A hardware manufacturer may measure campaign allocations against resulting “purchase page” views. A nonprofit may examine the impact of programs on volunteer rosters. What are some other examples of midfunnel metrics?

In our weekend escape example, you don’t need to count every Rhode Island license plate in New York State, but perhaps you can do better than staking out Connecticut’s eastern edge. For a suitable midfunnel metric, I propose you count the Rhode Island license plates crossing the George Washington and Tappan Zee Bridges (just past the entrance to New York State).

If you’re from northern California, you may find it easier to place African countries than New England states on a map. I’ve got you covered: substitute Lake Tahoe for New York and Sacramento for Connecticut. Count license plates entering the El Dorado and Tahoe National Forests. Everything else follows.

my $1b market is bigger than yours

When I stepped into my second consecutive Starbucks to meet Nir Eyal at the end of a long day, my brain was squishy.  The hamster in there was just sitting on his wheel, biding his time.  But from the moment Nir opened his mouth, the ideas flowed out and forced me to think and reconsider assumptions.  We had an invigorating conversation on sundry topics; we landed on the delicate topic of size before the barista kicked us out to close up shop.  As far as total addressable market (TAM) is concerned, does size matter at all?

In “Go Bottom Up, Not Belly Up” I reflected that the plan for how you saturate your Total Addressable Market (TAM) is far more important to a seed-stage company than its absolute size.  This sparked an email chain and conversation with Nir that left us wondering whether TAM – for solutions solving previously unmet needs – can be defined in any meaningful fashion.

At 500 Startups Demo Day last week, passionate entrepreneurs unveiled intriguing models and new technologies.  They attacked undefined or newly-defined market ailments in the hopes of receiving funding.  A majority of the 30 companies claimed to target $1 billion plus industries.  Yet history indicates that many of these 30 companies will be unable to raise a Series A and most of them will fail.

What does this mean for a seed stage entrepreneur hoping to construct a business model, raise funding, and find traction?  I’m not sure.  Nir reminded me that Zuckerberg’s initial need was finding a girl – what’s the market size for that?  So when David Morin had too many girls in his network and launched Path – did he size the same market differently?  Is one person’s pain point quantifiable?

Perhaps the answer lies in the “unexercised option value” of all future revenue streams of a product.  It’s the reason free dating service OkCupid is worth more multiplies of revenue than subscription-only  It explains how feature-, partner- and subscriber-rich social networks are worth unprecedented multiples of advertising revenue.

Still, I wonder: who evaluates theoretical revenue streams?  With public companies, I’ll pay attention to your stock tickers.  But for seed stage entrepreneurs, you better claim at least 10% of $1 billion.

Nir Eyal is a lecturer at Stanford Graduate School of Business and a mentor for 500 Startups, the Founder Institute, and the Thiel Fellowship.  He writes about the intersection of technology, psychology, and business in his blog: Nir and Far.

scrappy marketers pull active seekers first

Fishing on Ashumet Pond is one of the most relaxing things in the world.  But good luck catching anything!  Unless you’re Kevin.  Kevin loves fish, he wears fish shirts, he puts fish bumper stickers on his car.  Kevin researches whether a surplus of carbon dioxide causes cataracts in fish.  And Kevin catches fish whenever he wants to.

The way I see it, there are two ways I can someday snag fish like Kevin (besides trading in my mathematics degree for marine biology, of course):

1.  Improve fishing skill

2.  Add fish to pond

Pull First

Hopefully, your product or service already has an audience out there.  They’re looking for you.  It’s your responsibility to make yourself as available as possible.  Find them wherever they are and show them you can satisfy their need.

At a previous company, we coined the term “active seekers” to describe this population.  These are the hungry folk.  The lawnmower broke and they’re searching for “John Deere riding mower” because it was a hassle to dump those lawn clippings every fifteen minutes.  The toilet flooded and they’re requesting proposals on Thumbtack for a trusted plumber.

Pull marketing includes search-based advertising (Google AdWords) and the yellow pages.  Sponsored listings or links in the appropriate directories.  Signs for bananas when the monkeys are famished.

Pull marketing (alternatively known as inbound marketing, demand harvesting) has two advantages: (a) it’s cheap and (b) it converts quickly.  The only drawback?  You can do a finite amount of it before you hit an invisible wall.  And you must invest in pull marketing to find that wall.

So next time you’re fishing, practice your casting before you get there.  Learn how to tie a fly.  If the fish are biting, you’ll painlessly catch more.  But what if there just aren’t any fish?

Then Push

If you’re solving a pain point that customers don’t even know they have, then you may not have much of an audience (yet).  And even if they know the pain point all too well, your audience may have trouble discovering you.

Push marketing (alternatively known as outbound marketing, demand generation) includes the vast majority of media: newsletters, display advertising, Facebook ads, any social media, billboards, taxi toppers, and even Google’s content network (search advertising’s ugly stepchild).

Why are there so many more channels for push advertising?  It’s (a) more expensive and (b) takes longer to convert dollars to customers due to that nuisance we call “educating” the customer.  What’s the advantage?  It’s unlimited.  Advertisers desperately need customers, publishers will gladly take your money, and all the while your target audience will do what they feel like.  With a billion dollar budget, you can market bayonets to every soldier in the world, but there’s no guarantee you’ll sell any.

One year, they stocked Ashumet Pond with extra bass.  I caught one or two fish that year.  I’m still an awful fisherman.

What if there are no active seekers?

Just because your audience doesn’t know (or care) about your product or service, you mustn’t lose hope.  This implies it will be costlier to acquire customers and harder to demonstrate positive ROI in the early days.  But be sure to extrapolate into the future: (a) will an active seeker population develop as your early customers share their experiences with your product or service – thus enabling you to add pull marketing back to your mix?  Or (b) will it become more expensive to stand out before your target audience as competitors enter and the market evolves – thus revealing a weakness in your customer acquisition strategy that needs to be addressed?

In marketing (and skeet shooting): Pull First, Then Push.

don’t ask me to get started

With these two words… I don’t know what to do.  If you’re Peter: I’ll check my email.  The basketball coach: I’ll prepare for wind sprints.  My mother: I’ll get off the couch.  If we’re on a first date, I’ll just look at you funny.

Context + ‘Get Started’ = Start Task.

No Context + ‘Get Started’ = Awkward!

What if I’m visiting your home page?  Designing suitable calls-to-action is a challenge indeed.  Your visitors have many motivations for stopping by.  Some websites (and emails, apps, etc.) address this by using a variation on ‘Get Started’ to push visitors along.  Visitors don’t have a choice.  They click because there’s nothing else to do.  This builds no affinity.  It may even build frustration.

But in order to choose more specific, appropriate calls-to-action, you need to understand whose needs are most relevant.  Here are five common reasons Boring Barry and Average Anne show up at your doorstep:

Gather Information.  We want to learn about your product or service. Help us find the specific information we want quickly.  We’re not ready to buy, so ‘Buy Now!’ scares us away.  But we’re busy, so unless you’re Wikipedia or WebMD, we may not have time and attention to ‘Learn More’ either. ‘What’s this widget?’ is a frequent starting point.

Try Something Out.  We want to try your product or service.  We’re curious enough to get our hands dirty, but ‘Buy Now’ makes us feel like you’re cruising the dance floor for an easy target.  Show us where to ‘Try this widget.’

Buy Something.  We’re ready to purchase your product or service.  We have all the information we need, so don’t talk us out of it.  We’ve gone to the trouble of fishing out our credit cards, so make it easy for us to ‘Buy this widget.’  Your link need not be front-and-center but it ought to be fairly easy to find.  After all, we’re paying you.

Looking for a Job.  We’ll take the time to dig a little deeper than most.  In return, we hope to understand what opportunities are available and how we can help you develop widgets.  We’re not looking to purchase widgets (although we’ll try them out before our job interview).

Everyone else (investors, journalists, and the wayward).  If we’re investors, we’ll get a general sense of your product or service and be in touch with you.  If we’re journalists, we’ll glance through your site and be in touch with you.  If we’re lost and end up on your site by accident, then we don’t really care what it says because we won’t be sticking around.  Don’t design your calls-to-action for us.

Crisp, clear calls to action are superior to ‘Get Started’ because they inform the visitor to proceed only if their needs align with your offer.  Your home page bounce rate may increase; however, you will find increased engagement on your secondary content, registration, and pricing pages.  These two tendencies offset each other.

As with any design or flow changes to your website, A/B testing and multivariate testing are powerful tools to put theory into practice and find what works best.  Just be sure to focus on the most appropriate metric.  Don’t optimize around fuzzy metrics such as bounce rate or time on site:

Engaged user + deep in content = Increased time on site.

Confused user + where to click? = Increased time on site**.

If you are generating leads, use the home page buttons that rack up the most leads.  If it’s an ecommerce site, provide paths that maximize transaction revenue.  If you’re unsure how people are using your site, install a free tool like Google Analytics and learn right now.

** For an extreme example of this phenomenon, go to and see how long it takes you to find the name of Jim Carrey’s mother.

build an ugly, unsafe product

If you’re targeting mass consumers with a new technology*, then scrap together something useful. Solve an obvious problem in a smart way that’s never been done before. Or find a subtle problem and be the first to solve it. We don’t mind jumping a few hurdles. It’s all right if you give us Courier font upon a black-and-white interface. We don’t even care how you store our data. Just solve our problem well.

Here are four reasons Boring Barry and Average Anne won’t try your product:

Because it’s pretty. The prettiest pie returns to the refrigerator if it tastes like cardboard this holiday season.

Because it’s safe. So the Geeksquad guy saved digital photos from your failed hard drive-turned-brick? Congratulations: you will care about safety for a few months. Protection, fraud, and the overwhelming urge to back everything up – these are not top-of-mind for most consumers. Of course, ignoring basic safety principles gives us a reason not to try your product. But we won’t pay attention just because you’re safe.

Because it’s loaded with features. Our attention spans are getting shorter. We’ll listen if you address a timely need. Once we know you and like you, a tiny fraction of us will tinker with your bells and whistles. I doubt we’ll pay you for them. (The features.)

Because TechCrunch wrote about it. Some Silicon Valley elites found you and a few thousand people will check you out. They’ll check out anything once. We never received a check from Dave McClure and frankly we don’t read much. But we still have a problem that needs to be solved.

*If you’re not selling into a mass consumer audience or not providing a technology solution, then these guidelines may be unsuitable. We’ll examine other markets in future posts.