In the commercial / marketing area businesses there is a clear tendency to focus on attracting customers. It’s something I’ve experienced many times, mostly because that was my job: to capture the maximum number of customers at the lowest possible price.
Obviously a company can not fail to attract customers, because it would not grow, their clients would leave the company gradually (there is always a percentage of churn ), because it would not would innovate commercial, and competition, and the company … end up close.
But what happens if we focus both capture and not pay attention to the quality of captured customer?
Recruitment strategies in online marketing : quantity or quality?
This is the discussion ‘eternal’ in digital marketing departments. We all agree that loyalty is very important, but we always end up focusing on attracting more.
A few days ago I read the post that inspired me to return to dwell on this topic.
The post talked using the ‘customer value’ (customer equity) , as a metric to measure the quality of the customer and, above all, as a way to guide the strategy for greater margin, and therefore a higher income (objectives Most companies).
What is customer equity and customer value?
Putting it in a simple way
Customer equity and customer value = number of customers x average net revenue per customer
Or what is the same:
Customer equity and customer value x = no customers Customer Lifetime Value ( CLV )
(In case you are evaluating the quality of the captured leads would be: no new customers x estimated CLV).
And this is calculated as:
Customer Lifetime Value (CLV) = Average revenue per customer x gross margin per customer / churn rate (customer cancellation fee).
To explain it any better than an example of what can happen if you control this metric. If you catch much but leave you little room and go fast you have a big problem. And whether or not you can be in the situation where each time a customer you catch why waste money?
If I invested in grasping ( CPA ) is higher than what the customer leaves your company ( GLC ), you lose money.
(In this post I am going to focus on analyzing the recruitment strategies. Obviously Equally important are loyalty (which increase both the CLV and customer equity), but do not go in them, not to dwell too much).
If on one hand we can not fail to capture and secondly we have to ensure the quality, where is the balance?
How to balance quantity and quality online marketing strategy?
We have to find a balance between quantity (volume) and quality. The volume we provide liquidity, and quality performance.
Moreover, as we have seen before, we have to bear in mind the ‘bet’ in CPA we do to capture leads. Since we control or CLV (as many companies with residence times) or we may be adding liquidity losses instead.
It is therefore very important to understand what we will get if we try to capture leads depending on the medium we use (paid, earned and owned) and the stage of the purchase funnel or marketing funnel where the user is located.
In the picture you can see below, I try to define the volume and quality of leads captured in terms of both variables.
What you see in the matrix is my perception based on what they have learned throughout the years in the online world. Of course there will be business models that my ratings are not correct.
What online channels which add volume and quality of leads?
Uptake in marketing strategy Marketing Funnel quality and quantity vs Tristan Elosegui
If you look closely at the various crossings you will see that it is unwise to try to attract users who are in the phase of awareness as to get a few conversions and dubious quality.
However, as we are approaching the stage of the conversion ( action ) the user is more convinced of purchase and quality of leads increases. At this time the medium used to capture varying determines a quality and / or volume.
I added caseloads stage of advocacy as a mere indicator of the best ways to retain and those who are not used to it (paid media).
I explain why.
Why in some cases we capture higher quality leads and other higher volume?
1. Stage marketing funnel in which the user is
If you capture a lead that is in the stage of awareness (for example) with an aggressive offer, the chances that this person will regret your purchase or to keep looking to find a better option are higher.
If you are convinced with an offer on the stage of awareness, the strength of your buying decision is much less than that can have a user who has gone through the various stages of decision making ( awareness = knowledge, consideration = research and action = decision making and purchase).
2. Means are more suitable for quality and other for volume
As with any strategy, means are more useful for volume and other for quality.
By its own idiosyncrasies:
The paid media (outbound marketing) are better suited to capture a high volume, but not so good for getting quality.
The own and earned media, but they are getting better quality leads, but with less volume.
In the media we paid ‘interrupted’ message and our own and earned media, are the users who come to us for information / confidence to make their purchase decision.
3. Evolution of the customer mix
For the evolution of the company, the volume of users we capture quality is reduced.
At first, the percentage of users find us a genuine interest (own and earned media), is greater than those who buy our product for an offer or for convenience.
The reason is clear. The company needs to grow, and it begins to invest more in media that will bring that cash (paid media) as volume leads to low cost ( CPA ).
This solves a short term problem but causes another medium to long term ( churn , profitability, etc.).
Marketing strategies must focus on creating audience
Difference between paid and earned audience traffic
1. Paid Traffic:
If we base our strategy on paid media, we will capture traffic, of varying quality depending on the stage of the funnel where they are, but it’s hard to get generate engagement, based on online campaigns. We are capturing traffic. We’re picking up on what media convergence strategies called ‘ sponsored customer.
People with a relative interest in our company or products, which we capture the interest campaigns based payment methods, promotions. As a result we get a high volume of visitors, but with a low conversion rate, and what is worse, a CLV potentially low (that we have to be measured in each case to confirm).
Besides these main KPI, check this profile is quickly detected by high bounce rate, low time to visit, etc.
2. won Audience:
When we define a strategy for creating online audience (quality leads), we use the best combination of paid media, and own cattle, and focus on achieving the objectives of each stage of the funnel . Thus we get the attention of people really interested in our product / service.
We are creating audience that comes to us why you are interested our product, we are not paying them to come.
We’re taking the user from stage to stage, with the most appropriate strategy for each moment. Thus, users are taking the decision at their own pace (not ours).
Thus we capture even higher quality leads at a lower volume.
As I said at the beginning of the post, the key is balance between the two strategies, but taking clear that we must combine paid media with other media, to try to get the highest possible quality.
Customer equity and metrics to balance marketing strategies
To try to balance between volume and quality, we must set the value of client we are generating for the company and the customer mix in terms of their contribution to this value.
The customer equity will predict whether our strategy is balanced or are betting ‘too’ by the volume or quality of captured lead.
That is, we have to analyze the results of our acquisition strategy from several points of view:
Before the visit : results of our strategy out of our website in terms of performance of campaigns, content, actions, etc., in their profitability, etc. etc.
During the visit, to see the quality and volume of traffic generated in terms of interaction with the page and conversions obtained.
After the visit, to analyze the quality of captured lead in terms of profitability, CLV and ultimately customer equity it brings.