Mistake #3: Focusing on Trying to Find the Silver Bullet for Customer Acquisition
The most common line of questions we get is, “What the best customer acquisition channel for me to use? Should I use Facebook or search or [fill in the blank]?” The answer is that there is no silver bullet.
One reason there is no silver bullet is that every business is different. Instagram may work great for one company, but if your target customer isn’t on Instagram, the platform is unlikely to work for you.
Another thing to remember is that all the ad platforms are dynamic markets, driven by supply and demand. There could be a lot of supply and little demand for the customers you are going after or the reverse could be true. Also, the balance of supply and demand can change quickly. The economics may be great one week and poor the next.
Even if a given channel (e.g., Instagram) has a lot of potential customers on it, much of your success comes down to your execution. Think targeting, targeting, targeting. You need to leverage the targeting capabilities of that platform to make sure that you only spend money to get in front of people who are highly inclined to buy your product. If your targeting is off, it is like going outside and lighting your money on fire.
Thinking that there is a silver bullet really misses the most critical point of customer acquisition. Customer acquisition is about having excellent tracking and analytics so you can see what is working. We like to joke that your approach should be to try a bunch of stuff and see what sticks to the wall. Perhaps a more professional way of saying it is that you should come up with some hypotheses about what works, try them, measure the results, and then evaluate what you want to do next.
This is worth repeating: you want to make sure that you have excellent analytics. Most importantly, you need to be able to track return on ad spend for each marketing source and campaign. In other words, you need to be able to compare how much you spend by source and campaign and compare that to the lifetime value of new customers acquired through those channels. This gives you return on ad spend for each source and campaign.
When you have this all set up, take all your marketing sources and campaigns and rank order them using return on ad spend. Then cut off the bottom ones and funnel that money to the ones at the top. Then figure out how to improve the ones in the middle. Don’t lose sleep over what the exact ROI is for a given marketing source — you are trying to achieve of level of precision that isn’t there.
This post is an excerpt from How to Acquire Your First Million Customers by Ken McDonald and Chris Newton, two Internet execs who have grown multiple companies to over 10 million customers. Get your copy of the book to learn more proven customer acquisition tips and techniques.