Customer Acquisition Quotes

An advertising strategy is based on proper research which guides you in this entire process of customer acquisition with the help of ads.

The faster you run high quality experiments, the more likely you’ll find scalable, effective growth tactics. Determining the success of a customer acquisition idea is dependent on an effective tracking and reporting system, so don’t start testing until your tracking/reporting system has been implemented.

Lifetime value and customer acquisition cost are two of the key numbers you need to know to measure marketing effectiveness.

Advertising can work for startups, too, but only when your customer acquisition costs and customer lifetime value make every other distribution channel uneconomical.

word of mouth. However, before customer retention, we need to think about customer acquisition (AKA marketing). The most successful entrepreneurs always start with marketing.

I often see teams that maniacally focus on their metrics around customer acquisition and retention. This usually works well for customer acquisition, but not so well for retention. Why? For many products, metrics often describe the customer acquisition goal in enough detail to provide sufficient management guidance. In contrast, the metrics for customer retention do not provide enough color to be a complete management tool. As a result, many young companies overemphasize retention metrics and do not spend enough time going deep enough on the actual user experience. This generally results in a frantic numbers chase that does not end in a great product.

durability of customer relationships. Invest money in customer retention, because it’s a small fraction of the cost of customer acquisition.

My target customer will be? The problem my customer wants to solve is? My customer’s need can be solved with? Why can’t my customer solve this today? The measurable outcome my customer wants to achieve is? My primary customer acquisition tactic will be? My earliest adopter will be? I will make money (revenue) by? My primary competition will be? I will beat my competitors primarily because of? My biggest risk to financial viability is? My biggest technical or engineering risk is? What assumptions do we have that, if proven wrong, would cause this business to fail?  (Tip: include market size in this list) You should be able to look at this list and spot

The startup’s goal is to find a profitable customer acquisition strategy by spending small amounts of money in a lot of them, measuring results, and then narrowing down the best channels, while performing PDCA for continuous improvement.

As Sean Ellis, one of the first growth hackers—he coined the term with Patrick Vlaskovits—puts it: “Focusing on customer acquisition over ‘awareness’ takes discipline. . . . At a certain scale, awareness/brand building makes sense. But for the first year or two it’s a total waste of money.

I have seen the consequences of attempting to shortcut this natural process of growth often in the business world, where executives attempt to “buy” a new culture of improved productivity, quality, morale, and customer service with strong speeches, smile training, and external interventions, or through mergers, acquisitions, and friendly or unfriendly takeovers. But they ignore the low-trust climate produced by such manipulations. When these methods don’t work, they look for other Personality Ethic techniques that will—all the time ignoring and violating the natural principles and processes on which a high-trust culture is based.

Morality makes stupid. — Custom represents the experiences of men of earlier times as to what they supposed useful and harmful — but the sense for custom (morality) applies, not to these experiences as such, but to the age, the sanctity, the indiscussability of the custom. And so this feeling is a hindrance to the acquisition of new experiences and the correction of customs: that is to say, morality is a hindrance to the development of new and better customs: it makes stupid.

The knowledge both of the Poet and the Man of science is pleasure; but the knowledge of the one cleaves to us as a necessary part of our existence, our natural and unalienable inheritance; the other is a personal and individual acquisition, slow to come to us, and by no habitual and direct sympathy connecting us with our fellow-beings. The Man of science seeks truth as a remote and unknown benefactor; he cherishes and loves it in his solitude: the Poet, singing a song in which all human beings join with him, rejoices in the presence of truth as our visible friend and hourly companion. Poetry is the breath and finer spirit of all knowledge; it is the impassioned expression which is in the countenance of all Science. Emphatically may it be said of the Poet, as Shakespeare hath said of man, ‘that he looks before and after.’ He is the rock of defence for human nature; an upholder and preserver, carrying everywhere with him relationship and love. In spite of difference of soil and climate, of language and manners, of laws and customs: in spite of things silently gone out of mind, and things violently destroyed; the Poet binds together by passion and knowledge the vast empire of human society, as it is spread over the whole earth, and over all time. The objects of the Poet’s thoughts are everywhere; though the eyes and senses of man are, it is true, his favourite guides, yet he will follow wheresoever he can find an atmosphere of sensation in which to move his wings. Poetry is the first and last of all knowledge—it is as immortal as the heart of man.

How could these hierarchical, acquisitive, market-oriented, monotheistic, ethnocentric newcomers have absorbed ideas and customs from the egalitarian, reciprocal, noncapitalistic, pantheistic, ethnocentric natives? The

Asiatic youths are flocking to Western colleges for the equipment of modern education. Our insight does not penetrate your culture deeply, but at least we are willing to learn. Some of my compatriots have adopted too much of your customs and too much of your etiquette, in the delusion that the acquisition of stiff collars and tall silk hats comprised the attainment of your civilisation. Pathetic and deplorable as such affectations are, they evince our willingness to approach the West on our knees.

A persons trustworthiness in one area of life may not necessarily transfer over to their trustworthiness as a borrower. And a business that can be trusted to do the right thing for its customers may not necessarily be a business that can be trusted to do the right thing for its creditors.

the right way.’ Each went something like this: Step 1: They got me excited about all the new leads they would bring.   Step 2: I’d go through an onboarding process that felt valuable (and sometimes was).   Step 3: They assigned their “best” senior rep to my account.   Step 4: I saw some results.   Step 5: They moved my senior rep to the newest customer...   Step 6: A junior rep starts managing my account. My results suffered.   Step 7: I complained.   Step 8: The senior rep would come back once in a while to make me feel better.   Step 9: Results still suffered. And I’d eventually cancel.   Step 10: I’d search for another agency and repeat the cycle of insanity.   Step 11: For the zillionth time–Start wondering why I wasn’t getting results like the first time.

It is curious why anybody should pooh-pooh a study of fossils or various forms of rocks or lava. Such things grant us our only vision into Natural History’s big book; and it isn't a book in first-class condition. Far from it! Just a tiny scrap; a slip; or, possibly a big chunk is found, with nothing notifying us as to how it got to that particular point, nor how long ago. Man can only look at it, lift it, rap it, cut into it, and squint at it through a magnifying glass. And,— think about it. That’s all; until a formal study brings accompanying thoughts from many minds; and, by such tactics, judging that in all probability such and such a rock or fossil footprint is about so old. Natural History holds you in its grasp through just this impossibility of finding actual facts; for it is thus causing you to think. Now, thinking is not only a voluntary function; it is an acquisition; an art. Plants do not think. Animals probably do, but in a primary way, such as an aid in knowing poisonous foods, and how to bring up an offspring with similar ability. But Man can, and should think, and think hard and constantly. It is ridiculous to rush blindly into an action without looking forward to lay out a plan. Such an unthinking custom is almost a panic, and panic is but a mild form of insanity

The Ten Ways to Evaluate a Market provide a back-of-the-napkin method you can use to identify the attractiveness of any potential market. Rate each of the ten factors below on a scale of 0 to 10, where 0 is terrible and 10 fantastic. When in doubt, be conservative in your estimate: Urgency. How badly do people want or need this right now? (Renting an old movie is low urgency; seeing the first showing of a new movie on opening night is high urgency, since it only happens once.) Market Size. How many people are purchasing things like this? (The market for underwater basket-weaving courses is very small; the market for cancer cures is massive.) Pricing Potential. What is the highest price a typical purchaser would be willing to spend for a solution? (Lollipops sell for $0.05; aircraft carriers sell for billions.) Cost of Customer Acquisition. How easy is it to acquire a new customer? On average, how much will it cost to generate a sale, in both money and effort? (Restaurants built on high-traffic interstate highways spend little to bring in new customers. Government contractors can spend millions landing major procurement deals.) Cost of Value Delivery. How much will it cost to create and deliver the value offered, in both money and effort? (Delivering files via the internet is almost free; inventing a product and building a factory costs millions.) Uniqueness of Offer. How unique is your offer versus competing offerings in the market, and how easy is it for potential competitors to copy you? (There are many hair salons but very few companies that offer private space travel.) Speed to Market. How soon can you create something to sell? (You can offer to mow a neighbor’s lawn in minutes; opening a bank can take years.) Up-front Investment. How much will you have to invest before you’re ready to sell? (To be a housekeeper, all you need is a set of inexpensive cleaning products. To mine for gold, you need millions to purchase land and excavating equipment.) Upsell Potential. Are there related secondary offers that you could also present to purchasing customers? (Customers who purchase razors need shaving cream and extra blades as well; buy a Frisbee and you won’t need another unless you lose it.) Evergreen Potential. Once the initial offer has been created, how much additional work will you have to put in in order to continue selling? (Business consulting requires ongoing work to get paid; a book can be produced once and then sold over and over as is.) When you’re done with your assessment, add up the score. If the score is 50 or below, move on to another idea—there are better places to invest your energy and resources. If the score is 75 or above, you have a very promising idea—full speed ahead. Anything between 50 and 75 has the potential to pay the bills but won’t be a home run without a huge investment of energy and resources.

Under the impact of Western cultural influences, the souls of many Muslim men and women are slowly shrivelling. They are letting themselves be led away from their erstwhile belief that an improvement of living standards should be but a means to improving man’s spiritual perceptions; they are falling into the same idolatry of ‘progress’ into which the Western world fell after it reduced religion to a mere melodious tinkling somewhere in the background of happening; and are thereby growing smaller in stature, not greater: for all cultural imitation, opposed as it is to creativeness, is bound to make a people small... Not that the Muslims could not learn much from the West, especially in the fields of science and technology. But, then, acquisition of scientific notions and methods is not really ‘imitation’: and certainly not in the case of a people whose faith commands them to search for knowledge wherever it is to be found. Science is neither Western nor Eastern, for all scientific discoveries are only links in an unending chain of intellectual endeavour which embraces mankind as a whole. Every scientist builds on the foundations supplied by his predecessors, be they of his own nation or of another; and this process of building, correcting and improving goes on and on, from man to man, from age to age, from civilisation to civilisation: so that the scientific achievements of a particular age or civilisation can never be said to ‘belong’ to that age or civilisation. At various times one nation, more vigorous than others, is able to contribute more to the general fund of knowledge; but in the long run the process is shared, and legitimately so, by all. There was a time when the civilisation of the Muslims was more vigorous than the civilisation of Europe. It transmitted to Europe many technological inventions of a revolutionary nature, and more than that: the very principles of that ‘scientific method’ on which modern science and civilisation are built. Nevertheless, Jabir ibn Hayyan’s fundamental discoveries in chemistry did not make chemistry an ‘Arabian’ science; nor can algebra and trigonometry be described as ‘Muslim’ sciences, although the one was evolved by Al-Khwarizmi and the other by Al-Battani, both of whom were Muslims: just as one cannot speak of an ‘English’ Theory of Gravity, although the man who formulated it was an Englishman. All such achievements are the common property of the human race. If, therefore, the Muslims adopt, as adopt they must, modern methods in science and technology, they will do not more than follow the evolutionary instinct which causes men to avail themselves of other men’s experiences. But if they adopt - as there is no need for them to do - Western forms of life, Western manners and customs and social concepts, they will not gain thereby: for what the West can give them in this respect will not be superior to what their own culture has given them and to what their own faith points the way. If the Muslims keep their heads cool and accept process as a means and not an end in itself, they may not only retain their own inner freedom but also, perhaps, pass on to Western man the lost secret of life’s sweetness...

Before you can set about getting traction, you have to define what traction means for your company. You need to set a traction goal. At the earliest stages, this traction goal is usually to get enough traction to either raise funding or become profitable. In any case, you should figure out what this goal means in terms of hard numbers. How many customers do you need and at what growth rate? Your traction strategy should always be focused on moving the needle for your traction goal. By moving the needle, we mean focusing on marketing activities that result in a measurable, significant impact on your traction goal. It should be something that advances your user acquisition goal in a meaningful way, not something that would be just a blip even if it worked.

Focusing on customer acquisition over ‘awareness’ takes discipline. . . . At a certain scale, awareness/brand building makes sense. But for the first year or two it’s a total waste of money.”25

A word that can mean anything has lost its bite. To give content to a concept one has to draw lines, marking off what it denotes and what it does not. To begin the journey toward clarity, it is helpful to recognize that the words “strategy” and “strategic” are often sloppily used to mark decisions made by the highest-level officials. For example, in business, most mergers and acquisitions, investments in expensive new facilities, negotiations with important suppliers and customers, and overall organizational design are normally considered to be “strategic.

Most important, the PayPal team realized that getting users to sign up wasn’t enough; they needed them to try the payment service, recognize its value to them, and become regular users. In other words, user commitment was more important than user acquisition. So PayPal designed the incentives to tip new customers into the ranks of active users. Not only did the incentive payments make joining PayPal feel riskless and attractive, they also virtually guaranteed that new users would start participating in transactions—if only to spend the $10 they’d been gifted in their accounts.

Furthermore, for a platform business, user commitment and active usage, not sign-ups or acquisitions, are the true indicators of customer adoption. That’s why platforms must attract users by structuring incentives for participation—preferably incentives that are organically connected to the interactions made possible by the platform. Traditionally, the marketing function was divorced from the product. In network businesses, marketing needs to be baked into the platform.

The total net profit that you earn on average over the course of your relationship with a customer (Customer Lifetime Value, or CLV) must exceed the amount you spend on average to acquire a new customer (Customer Acquisition Cost, or CAC).

The estate sale was crowded
 But I think the dead actress felt cheated. Things deserve acquisition, not purchase.
 Us customers, searching through her decades, Will never know what it’s like
To earn a good death.

What is more important is that in order for a custom or innovation to be preserved, there were two distinct prerequisites. Firstly, there must have existed some conditions that made possible the preservation through generations of certain practices whose benefits were not necessarily understood or appreciated. Secondly, there must have been the acquisition of distinct advantages by those groups that kept to such customs, thereby enabling them to expand more rapidly than others and ultimately to supersede (or absorb) those not possessing similar customs.

in a product-led business, your revenue and customer acquisition model are married together. (It’s an arranged marriage, but a marriage nonetheless.) In a sales-led business, the revenue and customer acquisition models are separated.

By making it easy for people to experience the value of our product, we transformed it into a powerful customer acquisition model.

Focusing on one outcome to the detriment of all else. Like we saw in the Wells Fargo story, focusing on one metric at the cost of all else can quickly derail a team and company. In addition to your primary outcome, a team needs to monitor health metrics to ensure they aren’t causing detrimental effects elsewhere. For example, customer-acquisition goals are often paired with customer-satisfaction metrics to ensure that we aren’t acquiring unhappy customers. To be clear, this doesn’t mean one team is focused on both acquisition and satisfaction at the same time. It means their goal is to increase acquisition without negatively impacting satisfaction.

A Value Engine is a visual representation of how a company creates and captures marketplace value through the 1) acquisition of new customers, 2) fulfillment of existing customers, and 3) creation and/or improvement of the company’s product and service offerings.

Horizon 2: Areas of focus and accountability—The segments of our life and work that we need to maintain, to ensure stability and health of ourselves and our enterprises (e.g., health, finances, customer service, strategic planning, family, career) Horizon 3: Goals and objectives—The mid- to longer-term outcomes to accomplish (usually within three to twenty-four months); e.g., “Finalize acquisition of Acme Consulting,” “Establish profitable online version of our leadership training course,” “Get Maria’s college plans finalized” Horizon 4: Vision—Long-term desired outcomes; ideal scenarios of wild success (e.g., “Publish my memoir,” “Take the company public,” “Have a vacation home in Provence”) Horizon 5: Purpose, principles—Ultimate intention, raison d’être, and core values of a person or enterprise (e.g., “To serve the growth of our community in ways that sustainably provide the greatest good for the greatest number of our citizens”)

It's also important for tech product managers to have a broad understanding of the types of analytics that are important to your product. Many have too narrow of a view. Here is the core set for most tech products: User behavior analytics (click paths, engagement) Business analytics (active users, conversion rate, lifetime value, retention) Financial analytics (ASP, billings, time to close) Performance (load time, uptime) Operational costs (storage, hosting) Go‐to‐market costs (acquisition costs, cost of sales, programs) Sentiment (NPS, customer satisfaction, surveys)

The faster you run high-quality experiments, the more likely you’ll find scalable, effective growth tactics. Determining the success of a customer acquisition idea is dependent on an effective tracking and reporting system, so don’t start testing until your tracking/reporting system has been implemented.

If a networked product can begin to win over a series of networks faster than its competition, then it develops an accumulating advantage. These advantages, naturally, manifest as increasing network effects across customer acquisition, engagement, and monetization. Smaller networks might unravel and lose their users, who might switch over. Naturally, it becomes important for every player to figure out how to compete in this type of high-stakes environment. But how does the competitive playbook work in a world with network effects? First, I’ll tell you what it’s not: it’s certainly not a contest to see who can ship more features. In fact, sometimes the products seem roughly the same—just think about food-delivery or messaging apps—and if not, they often become undifferentiated since the features are relatively easy to copy. Instead, it’s often the dynamics of the underlying network that make all the difference. Although the apps for DoorDash and Uber Eats look similar, the former’s focus on high-value, low-competition areas like suburbs and college towns made all the difference—today, DoorDash’s market share is 2x that of Uber Eats. Facebook built highly dense and engaged networks starting with college campuses versus Google+’s scattered launch that built weak, disconnected networks. Rarely in network-effects-driven categories does a product win based on features—instead, it’s a combination of harnessing network effects and building a product experience that reinforces those advantages. It’s also not about whose network is bigger, a counterpoint to jargon like “first mover advantage.” In reality, you see examples of startups disrupting the big guys all the time. There’s been a slew of players who have “unbundled” parts of Craigslist, cherry-picking the best subcategories and making them apps unto themselves. Airbnb, Zillow, Thumbtack, Indeed, and many others fall into this category. Facebook won in a world where MySpace was already huge. And more recently, collaboration tools like Notion and Zoom are succeeding in a world where Google Suite, WebEx, and Skype already have significant traction. Instead, the quality of the networks matters a lot—which makes it important for new entrants to figure out which networks to cherry-pick to get started, which I’ll discuss in its own chapter.

Over the years, Facebook has executed an effective playbook that does exactly this, at scale. Take Instagram as an example—in the early days, the core product tapped into Facebook’s network by making it easy to share photos from one product to the other. This creates a viral loop that drives new users, but engagement, too, when likes and comments appear on both services. Being able to sign up to Instagram using your Facebook account also increases conversion rate, which creates a frictionless experience while simultaneously setting up integrations later in the experience. A direct approach to tying together the networks relies on using the very established social graph of Facebook to create more engagement. Bangaly Kaba, formerly head of growth at Instagram, describes how Instagram built off the network of its larger parent: Tapping into Facebook’s social graph became very powerful when we realized that following your real friends and having an audience of real friends was the most important factor for long-term retention. Facebook has a very rich social graph with not only address books but also years of friend interaction data. Using that info supercharged our ability to recommend the most relevant, real-life friends within the Instagram app in a way we couldn’t before, which boosted retention in a big way. The previous theory had been that getting users to follow celebrities and influencers was the most impactful action, but this was much better—the influencers rarely followed back and engaged with a new user’s content. Your friends would do that, bringing you back to the app, and we wouldn’t have been able to create this feature without Facebook’s network. Rather than using Facebook only as a source of new users, Instagram was able to use its larger parent to build stronger, denser networks. This is the foundation for stronger network effects. Instagram is a great example of bundling done well, and why a networked product that launches another networked product is at a huge advantage. The goal is to compete not just on features or product, but to always be the “big guy” in a competitive situation—to bring your bigger network as a competitive weapon, which in turn unlocks benefits for acquisition, engagement, and monetization. Going back to Microsoft, part of their competitive magic came when they could bring their entire ecosystem—developers, customers, PC makers, and others—to compete at multiple levels, not just on building more features. And the most important part of this ecosystem was the developers.

A Very Effective Path Adam Hyder, Head of Technology at Jobvite, a leader in Talent Acquisition software, analyzed Jobvite’s customer data set. Adam found that while referrals make up only 6% of the applicant pool, they accounted for 39.9% of hires

It might have been easy to think they should just double down on their marketing spend, but instead the team looked toward amplifying the network effects that engaged its streamers. Leveraging network effects for customer acquisition is the norm for the more successful products on the planet. Many of them have more than a billion active users, and as you might imagine, it’s simply not tenable to buy this scale of users through paid marketing.

Creating Key User Segments The beauty with segmentation is that it can be used for more than email targeting. You can use your segmentation for tracking and reporting, to recruit candidates for interviews, and for quality assurance. If your segmentation doesn’t get you the right users, you want to find out as quickly as possible. Before starting to write emails, you’ll want to create key user segments. Those could be: people who haven’t signed up for your product (if the required data is available); people who signed up today; people who signed up in the last seven days; people who signed up in the last seven days, but didn’t engage, or didn’t activate; people who signed up in the last 30, 60 or 90 days and activated; inactive users; users whose trial is about to end or just ended and that you would eventually like to convert; paid subscribers in their first month; paid subscribers retained for two months or more; subscribers on annual plans; users who you think would be willing to refer your product to others; subscribers who cancelled; subscribers who cancelled more than once; or signups per specific acquisition channel. Don’t go too far, but do try to test real segments with real data. Let them run a few weeks. Do users flow through the way you’d expect them to? Go through random profiles in each of these segments and compare with the data from your database. Are those the users you’d expect to find in each of these segments? Any issues? You want to uncover issues with the implementation or your segmentation as early as possible. It’s easier if you do this—and much less costly in terms of mistakes—before you start sending emails than after. Make sure you can track users across different segments and that your segments truly are mutually exclusive when they need to be. Identify issues, adjust, and refine. This step will save your team a lot of headaches later on. As you test your segments, make them available to the rest of your team. Your colleagues can also help point out issues. At this point, if there aren’t any major issues, your setup is complete. Let’s get started sending some emails!

Reactivation is often a quicker, simpler, and more effective approach to increasing revenue than attracting new customers. Your old customers already know and Trust you, and they’re aware of the value you provide. You have their information—you don’t have to find them. Your cost of customer acquisition (a component of Allowable Acquisition Cost) is low—all you have to do is contact them and present an attractive offer.

You hook them up to your faster server and show their website loading at lightning speed. They get more customers from your faster load times. If they want to keep it, they need to keep paying you.

FOCUSING TOO MUCH ON THE NUMBERS In the second example, I managed the team to a set of numbers that did not fully capture what I wanted. I wanted a great product that customers would love with high quality and on time—in that order. Unfortunately, the metrics that I set did not capture those priorities. At a basic level, metrics are incentives. By measuring quality, features, and schedule and discussing them at every staff meeting, my people focused intensely on those metrics to the exclusion of other goals. The metrics did not describe the real goals and I distracted the team as a result. Interestingly, I see this same problem play out in many consumer Internet startups. I often see teams that maniacally focus on their metrics around customer acquisition and retention. This usually works well for customer acquisition, but not so well for retention. Why? For many products, metrics often describe the customer acquisition goal in enough detail to provide sufficient management guidance. In contrast, the metrics for customer retention do not provide enough color to be a complete management tool. As a result, many young companies overemphasize retention metrics and do not spend enough time going deep enough on the actual user experience. This generally results in a frantic numbers chase that does not end in a great product. It’s important to supplement a great product vision with a strong discipline around the metrics, but if you substitute metrics for product vision, you will not get what you want.

With marketing, with customer acquisition, with accounting, I first look and say, "Hey, what's taking people's time? What can we automate?" If I can't automate it, do I really need it to be done? If I do need it to be done, all right, then we'll open a req.

Let’s look at the case of Opsware. Why did I sell Opsware? Another good question is why didn’t I sell Opsware until I did? At Opsware, we started in the server automation market. When we received our first inquiries and offers for the server automation company, we had fewer than fifty customers. I believed that there were at least ten thousand target customers and that we had a decent shot at being number one. In addition, although I knew the market would be redefined, I thought that we could expand to networks and storage (data center automation) faster than the competition and win that market as well. Therefore, assuming 30 percent market share, somebody would have had to pay sixty times what we were worth in forward credit to buy out our potential. You won’t be surprised to find that nobody was willing to pay that. Once we grew to several hundred customers and expanded into data center automation, we were still number one and were more valuable stand-alone than any of the prior acquisition offers. At that point both Opsware and our main competitor, BladeLogic, had developed into full-fledged companies (worldwide sales forces, built-out professional services, etc.). This was significant, because it meant that a large company could buy one of us and potentially execute successfully (big enterprise companies can’t generally succeed with small acquisitions, because too much of the important intellectual property is the sales methodology, and big companies can’t build that).

When we become an autonomous organization, we will be one of the largest unadulterated digital security organizations on the planet,” he told the annual Intel Security Focus meeting in Las Vegas. “Not only will we be one of the greatest, however, we will not rest until we achieve our goal of being the best,” said Young. This is the main focus since Intel reported on agreements to deactivate its security business as a free organization in association with the venture company TPG, five years after the acquisition of McAfee. Young focused on his vision of the new company, his roadmap to achieve that, the need for rapid innovation and the importance of collaboration between industries. “One of the things I love about this conference is that we all come together to find ways to win, to work together,” he said. First, Young highlighted the publication of the book The Second Economy: the race for trust, treasure and time in the war of cybersecurity. The main objective of the book is to help the information security officers (CISO) to communicate the battles that everyone faces in front of others in the c-suite. “So we can recruit them into our fight, we need to recruit others on our journey if we want to be successful,” he said. Challenging assumptions The book is also aimed at encouraging information security professionals to challenge their own assumptions. “I plan to send two copies of this book to the winner of the US presidential election, because cybersecurity is going to be one of the most important issues they could face,” said Young. “The book is about giving more people a vision of the dynamism of what we face in cybersecurity, which is why we have to continually challenge our assumptions,” he said. “That’s why we challenge our assumptions in the book, as well as our assumptions about what we do every day.” Young said Intel Security had asked thousands of customers to challenge the company’s assumptions in the last 18 months so that it could improve. “This week, we are going to bring many of those comments to life in delivering a lot of innovation throughout our portfolio,” he said. Then, Young used a video to underscore the message that the McAfee brand is based on the belief that there is power to work together, and that no person, product or organization can provide total security. By allowing protection, detection and correction to work together, the company believes it can react to cyber threats more quickly. By linking products from different suppliers to work together, the company believes that network security improves. By bringing together companies to share intelligence on threats, you can find better ways to protect each other. The company said that cyber crime is the biggest challenge of the digital era, and this can only be overcome by working together. Revealed a new slogan: “Together is power”. The video also revealed the logo of the new independent company, which Young called a symbol of its new beginning and a visual representation of what is essential to the company’s strategy. “The shield means defense, and the two intertwined components are a symbol of the union that we are in the industry,” he said. “The color red is a callback to our legacy in the industry.” Three main reasons for independence According to Young, there are three main reasons behind the decision to become an independent company. First of all, it should focus entirely on enterprise-level cybersecurity, solve customers ‘cybersecurity problems and address clients’ cybersecurity challenges. The second is innovation. “Because we are committed and dedicated to cybersecurity only at the company level, our innovation is focused on that,” said Young. Third is growth. “Our industry is moving faster than any other IT sub-segment, we have t

My target customer will be? (Tip: how would you describe your primary target customer) The problem my customer wants to solve is? (Tip: what does your customer struggle with or what need do they want to fulfill) My customer’s need can be solved with? (Tip: give a very concise description / elevator pitch of your product) Why can’t my customer solve this today? (Tip: what are the obstacles that have prevented my customer from solving this already) The measurable outcome my customer wants to achieve is? (Tip: what measurable change in your your customer’s life makes them love your product) My primary customer acquisition tactic will be? (Tip: you will likely have multiple marketing channels, but there is often one method, at most two, that dominates your customer acquisition — what is your current guess) My earliest adopter will be? (Tip: remember that you can’t get to the mainstream customer without getting early adopters first) I will make money (revenue) by? (Tip: don’t list all the ideas for making money, but pick your primary one) My primary competition will be? (Tip: think about both direct and indirect competition) I will beat my competitors primarily because of? (Tip: what truly differentiates you from the competition?) My biggest risk to financial viability is? (Tip: what could prevent you from getting to breakeven? is there something baked into your revenue or cost model that you can de-risk?) My biggest technical or engineering risk is? (Tip: is there a major technical challenge that might hinder building your product?)

Shopping Dana Gioia I enter the temple of my people but do not pray. I pass the altars of the gods but do not kneel Or offer sacrifices proper to the season. Strolling the hushed aisles of the department store, I see visions shining under glass, Divinities of leather, gold, and porcelain, Shrines of cut crystal, stainless steel, and silicon. But I wander the arcades of abundance, Empty of desire, no credit to my people, Envying the acolytes their passionate faith. Blessed are the acquisitive, For theirs is the kingdom of commerce. Redeem me, gods of the mall and marketplace. Mercury, protector of cell phones and fax machines, Venus, patroness of bath and bedroom chains, Tantalus, guardian of the food court. Beguile me with the aromas of coffee, musk, and cinnamon. Surround me with delicately colored soaps and moisturizing creams. Comfort me with posters of children with perfect smiles And pouting teenage models clad in lingerie. I am not made of stone. Show me satins, linen, crepe de chine, and silk, Heaped like cumuli in the morning sky, As if all caravans and argosies ended in this parking lot To fill these stockrooms and loading docks. Sing me the hymns of no cash down and the installment plan, Of custom fit, remote control, and priced to move. Whisper the blessing of Egyptian cotton, polyester, and cashmere. Tell me in what department my desire shall be found. Because I would buy happiness if I could find it, Spend all that I possessed or could borrow. But what can I bring you from these sad emporia? Where in this splendid clutter Shall I discover the one true thing? Nothing to carry, I should stroll easily Among the crowded countertops and eager cashiers, Bypassing the sullen lines and footsore customers, Spending only my time, discounting all I see. Instead I look for you among the pressing crowds, But they know nothing of you, turning away, Carrying their brightly packaged burdens. There is no angel among the vending stalls and signage. Where are you, my fugitive? Without you There is nothing but the getting and the spending Of things that have a price. Why else have I stalked the leased arcades Searching the kiosks and the cash machines? Where are you, my errant soul and innermost companion? Are you outside amid the potted palm trees, Bumming a cigarette or joking with the guards, Or are you wandering the parking lot Lost among the rows of Subarus and Audis? Or is it you I catch a sudden glimpse of Smiling behind the greasy window of the bus As it disappears into the evening rush?

#1 Creating overly optimistic projections about market size and customer acquisitions. My advice: Do your homework in terms of market research. Don’t blur the line between the number of potential customers who might possibly buy your product and the number who actually will. Don’t overlay an arbitrary percentage on the largest possible customer base when estimating potential market share. In three words: Know your customer. #2

When companies pay customers to try out their products and services, it’s a customer acquisition program. When companies invest in activities that increase customers’ willingness to pay a premium price, then they have a loyalty program.

However, in most tech organizations, marketing has evolved to be more about owning the brand and customer acquisition, while product owns the value proposition and development.

PayPal’s big challenge was to get new customers. They tried advertising. It was too expensive. They tried BD [business development] deals with big banks. Bureaucratic hilarity ensued. … the PayPal team reached an important conclusion: BD didn’t work. They needed organic, viral growth. They needed to give people money. So that’s what they did. New customers got $10 for signing up, and existing ones got $10 for referrals. Growth went exponential, and PayPal wound up paying $20 for each new customer. It felt like things were working and not working at the same time; 7 to 10 percent daily growth and 100 million users was good. No revenues and an exponentially growing cost structure were not. Things felt a little unstable. PayPal needed buzz so it could raise more capital and continue on. (Ultimately, this worked out. That does not mean it’s the best way to run a company. Indeed, it probably isn’t.)2 Thiel’s account captures both the desperation of those early days and the almost random experimentation the company resorted to in an effort to get PayPal off the ground. But in the end, the strategy worked. PayPal dramatically increased its base of consumers by incentivizing new sign-ups. Most important, the PayPal team realized that getting users to sign up wasn’t enough; they needed them to try the payment service, recognize its value to them, and become regular users. In other words, user commitment was more important than user acquisition. So PayPal designed the incentives to tip new customers into the ranks of active users. Not only did the incentive payments make joining PayPal feel riskless and attractive, they also virtually guaranteed that new users would start participating in transactions—if only to spend the $10 they’d been gifted in their accounts. PayPal’s explosive growth triggered a number of positive feedback loops. Once users experienced the convenience of PayPal, they often insisted on paying by this method when shopping online, thereby encouraging sellers to sign up. New users spread the word further, recommending PayPal to their friends. Sellers, in turn, began displaying PayPal logos on their product pages to inform buyers that they were prepared to honor this method of online payment. The sight of those logos informed more buyers of PayPal’s existence and encouraged them to sign up. PayPal also introduced a referral fee for sellers, incentivizing them to bring in still more sellers and buyers. Through these feedback loops, the PayPal network went to work on its own behalf—it served the needs of users (buyers and sellers) while spurring its own growth.

for a platform business, user commitment and active usage, not sign-ups or acquisitions, are the true indicators of customer adoption. That’s why platforms must attract users by structuring incentives for participation—preferably incentives that are organically connected to the interactions made possible by the platform. Traditionally, the marketing function was divorced from the product. In network businesses, marketing needs to be baked into the platform.

This experience might be compared with the success experienced by MFAs multiple acquisitions of brands and businesses that were quickly integrated within the existing IT and sales platform servicing existing customers of the larger parent company.

Groupon is a study of the hazards of pursuing scale and valuation at all costs. In 2010, Forbes called it the “fastest growing company ever” after its founders raised $135 million in funding, giving Groupon a valuation of more than $1 billion after just 17 months.5 The company turned down a $6 billion acquisition offer from Google and went public in 2011 with one of the biggest IPOs since Google’s in 2004.6 It was one of the original unicorns. However, the business model had serious problems. Groupon sometimes sold so many Daily Deals that participating businesses were overwhelmed . . . even crippled. Other businesses accused Groupon of strong-arming them to sign up for Daily Deals. Customers started to view the group discount (the company’s bread and butter) as a sign that a participating business was desperate. Businesses stopped signing up. Journalists suggested that Groupon was prioritizing customer acquisition over retention — growth over value — and that it had gone public before it had a solid, proven business model.7 Groupon is still a player, with just over $3 billion in annual revenue in 2015. But its stock has fallen from $26 a share to about $4 today, and it has withdrawn from many international markets. Also revealing is that the company is suing IBM for patent infringement, something that will not create customer value.8 Many promising startups have paid the price for rushing to scale. We can see clues to potential future failures in the recent “down rounds” (stock purchases priced at a lower valuation than those of previous investors) hitting companies like Foursquare, Gilt Group, Jet, Jawbone, and Technorati. In their rush to build scale, executives and founders search for shortcuts to sustainable, long-term revenue growth.

IT is the business’s competitive differentiator to customer acquisition and retention.

Which lawyer drafts the contract is often dictated by custom: financing agreements are drafted by lenders’ counsel; acquisition agreements are drafted by purchaser’s counsel; underwriting agreements are drafted by underwriter’s counsel; employment contracts are drafted by employers’ counsel; security agreements are drafted by secured party’s counsel. The underlying principle is that the party with the most leverage or with the most to lose from an inadequately drafted contract will do the drafting.

Interestingly, I see this same problem play out in many consumer Internet startups. I often see teams that maniacally focus on their metrics around customer acquisition and retention. This usually works well for customer acquisition, but not so well for retention. Why? For many products, metrics often describe the customer acquisition goal in enough detail to provide sufficient management guidance. In contrast, the metrics for customer retention do not provide enough color to be a complete management tool. As a result, many young companies overemphasize retention metrics and do not spend enough time going deep enough on the actual user experience. This generally results in a frantic numbers chase that does not end in a great product. It’s important to supplement a great product vision with a strong discipline around the metrics, but if you substitute metrics for product vision, you will not get what you want.

Nir elaborates in this post: TriggerThe trigger is the actuator of a behavior — the spark plug in the engine. Triggers come in two types: external and internal. Habit-forming technologies start by alerting users with external triggers like an email, a link on a web site, or the app icon on a phone. ActionAfter the trigger comes the intended action. Here, companies leverage two pulleys of human behavior – motivation and ability. This phase of the Hook draws upon the art and science of usability design to ensure that the user acts the way the designer intends. Variable RewardVariable schedules of reward are one of the most powerful tools that companies use to hook users. Research shows that levels of dopamine surge when the brain is expecting a reward. Introducing variability multiplies the effect, creating a frenzied hunting state, activating the parts associated with wanting and desire. Although classic examples include slot machines and lotteries, variable rewards are prevalent in habit-forming technologies as well. InvestmentThe last phase of the Hook is where the user is asked to do bit of work. The investment implies an action that improves the service for the next go-around. Inviting friends, stating preferences, building virtual assets, and learning to use new features are all commitments that improve the service for the user. These investments can be leveraged to make the trigger more engaging, the action easier, and the reward more exciting with every pass through the Hook. We’ve found this model (and the accompanying book) to be a great starting point for a customer acquisition and retention strategy.

Growth came from product innovations, unique acquisition channels that their competition hadn’t considered, and rigorous optimization driven by analytics and a deep understanding of their customers.

and monetizing their customers. These insights yield unique customer acquisition strategies that highlight this new approach to thinking about growth.  

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Halo Effect Cisco, the Silicon Valley firm, was once a darling of the new economy. Business journalists gushed about its success in every discipline: its wonderful customer service, perfect strategy, skilful acquisitions, unique corporate culture and charismatic CEO. In March 2000, it was the most valuable company in the world. When Cisco’s stock plummeted 80% the following year, the journalists changed their tune. Suddenly the company’s competitive advantages were reframed as destructive shortcomings: poor customer service, a woolly strategy, clumsy acquisitions, a lame corporate culture and an insipid CEO. All this – and yet neither the strategy nor the CEO had changed. What had changed, in the wake of the dot-com crash, was demand for Cisco’s product – and that was through no fault of the firm. The halo effect occurs when a single aspect dazzles us and affects how we see the full picture. In the case of Cisco, its halo shone particularly bright. Journalists were astounded by its stock prices and assumed the entire business was just as brilliant – without making closer investigation. The halo effect always works the same way: we take a simple-to-obtain or remarkable fact or detail, such as a company’s financial situation, and extrapolate conclusions from there that are harder to nail down, such as the merit of its management or the feasibility of its strategy. We often ascribe success and superiority where little is due, such as when we favour products from a manufacturer simply because of its good reputation. Another example of the halo effect: we believe that CEOs who are successful in one industry will thrive in any sector – and furthermore that they are heroes in their private lives, too.

Customer lifetime value and customer acquisition cost drive your growth, and you’ll run experiments to try to capture more loyal users for less, tweaking how you charge, when you charge, and what you charge for.

A destructive, zero-sum form of competition has been set in motion that confuses the acquisition of customers with the building of profitability.

Scaling is good if it brings in incremental revenue, but you have to watch for a decrease in engagement, a gradual saturation of the initial market, or a rising cost of customer acquisition. Changes in churn, segmented by channels, show whether you’re growing your most important asset — your customers — or hemorrhaging attention as you scale.

The same year we also acquired Financial Network Services (FNS), an Australian company with a retail banking software package called Bancs24. We needed them because some of our competitors had begun to target that market segment with their own IP. Bancs24 was a very comprehensive package and we were able to successfully win the systems integration contract for the State Bank of India (SBI) Group for implementation of core banking. Since we had invested considerable effort in customizing and strengthening it we felt acquiring FNS would be strategic for our products business. During our initial dealings with FNS and its feisty owner Tony Ward we learned to our surprise that when the product was being developed in the early 1980s TCS had deputed its programmers to Sydney to work with Tony and his team to help develop the product. Since the acquisition we have been able to deploy the FNS software package, rechristened ‘Bancs’, extensively with a number of domestic clients. Today close to 50 per cent of the banking transactions in India are processed by Bancs, thereby justifying the acquisition we made.

Indeed, early commentators scarcely attacked Christian doctrines, but they consistently portrayed Christian devotional practices as radical and socially divisive. Christianity had effectively “created a social group that promoted its own laws and its own patterns of behavior.”7 These behaviors, at odds with Roman custom, earned Christians the reputation of being revolutionaries and traitors to the good order of the state. Christian defenders, such as Justin Martyr (ca. 100–ca. 165), used the example of Christian practice to make the case that Jesus’s way “mended lives”: We who formerly…valued above all things the acquisition of wealth and possession, now bring what we have into a common stock, and communicate to everyone in need; we who hated and destroyed one another, and on account of their different manners would not live with men of a different tribe, now, since the coming of Christ, live familiarly with them, and pray for our enemies.8

a new customer (Customer Acquisition Cost, or CAC).

1. How would you rank the velocity of your sales team on a scale of one to ten, one being very slow and ten being very fast? What steps can you take to increase its velocity?   2. If your success requires new customer acquisition, what strategies can you put in place to increase sales efficiency?   3. Do you routinely develop strategies to block your competitors so that you do not have to rely solely on the effort of the sales team?   4. What could you do to increase the efficiency of your sales team? Will that translate into more sales dollars with the same number of reps?

In high-productivity sales organizations, salespeople do not cause customer acquisition growth, they fulfill it.

The industrial world of pipelines relies heavily on push. Consumers are accessed through specific marketing and communication channels that the business owns or pays for. In a world of scarcity, options were limited, and getting heard often sufficed to get marketers and their messages in front of consumers. In this environment, the traditional advertising and public relations industries focused almost solely on awareness creation—the classic technique for “pushing” a product or service into the consciousness of a potential customer. This model of marketing breaks down in the networked world, where access to marketing and communication channels is democratized—as illustrated, for example, by the viral global popularity of YouTube videos such as PSY’s “Gangnam Style” and Rebecca Black’s “Friday.” In this world of abundance—where both products and the messages about them are virtually unlimited—people are more distracted, as an endless array of competing options is only a click or a swipe away. Thus, creating awareness alone doesn’t drive adoption and usage, and pushing goods and services toward customers is no longer the key to success. Instead, those goods and services must be designed to be so attractive that they naturally pull customers into their orbit. Furthermore, for a platform business, user commitment and active usage, not sign-ups or acquisitions, are the true indicators of customer adoption. That’s why platforms must attract users by structuring incentives for participation—preferably incentives that are organically connected to the interactions made possible by the platform. Traditionally, the marketing function was divorced from the product. In network businesses, marketing needs to be baked into the platform.

Pramod decided to ask the marketing group to hire a dedicated product marketing manager (PMM) to help stoke acquisitions. These marketing specialists are often described as being the “voice of the customer” inside the company, working to gain insights into customers’ needs and desires, often conducting interviews, surveys, or focus groups, and helping to craft the messaging in order to make the marketing efforts more alluring and ensure they are conveying the value of the product most effectively. At some companies, these specialists might also be tasked with contributing to the product development, for example, by conducting competitive research to identify new features to consider, or assisting with product testing.

There is no question that it is easy to enter the wedding industry but it is tough to survive there because most businesses still don’t know what it takes to build a long-line of loyal customers in this business.

Normand Girard - Professional Operations Manager Normand Girard owns Metamorphosis Development and Remodeling LLC, a residential and commercial construction and renovation company. He takes care of all daily operations, including planning and supervising projects to meet desired results. Normand Girard helps with the acquisition and maintenance of company materials and equipment. His clients widely recognize Girard for his remarkable construction quality and customer service,

Remember that a core tenet of growth hacking is experimentation all through the customer experience funnel: not just customer awareness and acquisition but also activation, retention, revenue, and referral.

Saginaw and Weinzweig had no interest in pursuing acquisitions or moving to another location, and they knew of no alternative growth strategies for small companies like theirs. So they did a lot of reading, thinking, and talking—meeting regularly to discuss their ideas at a picnic table next to the deli. They wrote vision statements and then rewrote them, soliciting input from people inside and outside the business. By 1994, the outlines of a grand design had emerged. It was called the Zingerman’s Community of Businesses, or ZCoB, for short. Weinzweig and Saginaw envisioned a company comprised of twelve to fifteen separate businesses by 2009. The new businesses would be small and located in the Ann Arbor area. Each would bear the Zingerman’s name but would have its own specialty and identity, and all would be designed to enhance the quality of food and service offered to Zingerman’s customers while improving the financial performance of ZCoB and its components. There was already a bakery, Zingerman’s Bakehouse, as well as the deli. There could also be a training company, a mail order business, a caterer, a creamery, a restaurant or two, a vegetable stand—you name it.

WhatsApp had a freemium business model; the service was free for a year, after which it cost $1 per year. This low-friction model essentially eliminated the need for people working in functions like sales, marketing, and customer service, allowing WhatsApp to grow to five hundred million monthly active users by the time of its acquisition by Facebook, with a staff of just forty-three employees, a ratio of over ten million active users per employee!

create their own OKRs for their own organization. For example, the design department might have objectives related to moving to a responsive design; the engineering department might have objectives related to improving the scalability and performance of the architecture; and the quality department might have objectives relating to the test and release automation. The problem is that the individual members of each of these functional departments are the actual members of a cross‐functional product team. The product team has business‐related objectives (for example, to reduce the customer acquisition cost, to increase the number of daily active users, or to reduce the time to onboard a new customer), but each person on the team may have their own set of objectives that cascade down through their functional manager. Imagine if the engineers were told to spend their time on re‐platforming, the designers on moving to a responsive design, and QA on retooling. While each of these may be worthy activities, the chances of solving the business problems that the cross‐functional teams were created to solve are not high.

Nothing happens in a business without a customer

The rules that govern the sticky engine of growth are pretty simple: if the rate of new customer acquisition exceeds the churn rate, the product will grow. The speed of growth is determined by what I call the rate of compounding, which is simply the natural growth rate minus the churn rate.

Acquiring managers need to begin by asking, “What is it that really created the value that I just paid so dearly for? Did I justify the price because of its resources—its people, products, technology, market position, and so on? Or, was a substantial portion of its worth created by processes and values—unique ways of working and decision-making that have enabled the company to understand and satisfy customers, and develop, make, and deliver new products and services in a timely way? If the acquired company’s processes and values are the real driver of its success, then the last thing the acquiring manager wants to do is to integrate the company into the new parent organization. Integration will vaporize many of the processes and values of the acquired firm as its managers are required to adopt the buyer’s way of doing business and have their proposals to innovate evaluated according to the decision criteria of the acquiring company. If the acquiree’s processes and values were the reason for its historical success, a better strategy is to let the business stand alone, and for the parent to infuse its resources into the acquired firm’s processes and values. This strategy, in essence, truly constitutes the acquisition of new capabilities.

GSA is modernizing federal acquisition by consolidating the existing 24 Schedules into one single Schedule for products, services, and solutions. This provides consistency in the program for all stakeholders, makes it easier for customers to find total solutions under one contract vehicle, ensures terms and conditions to meet the needs of our customers, and eliminates duplicate contracts.

An informative tale, told with buoyancy, poignancy, anger, and love - Kirkus Reviews Kochan offers reflections on life in the Old Country and the upheaval of World War II that led to his 1948 immigration to Canada. This posthumously published memoir, compiled and edited by his daughter, Christine Kochan Foster, and collaborator Mark Collins Jenkins, is both a personal tale and a story of generations of Ukrainians longing for national independence. The author was born in 1923 in the small village of Tudorkovychi, then part of eastern Poland; nearly all the roughly 1,200 inhabitants were Ukrainians. To the east was Ukraine, then part of the Soviet Union. During his early years, Kochan was raised by his paternal grandparents; he later learned that his parents had divorced. His father lived in another town and was a member of the Polish Parliament; his mother had returned to her parents’ farm, close to Kochan’s home. In the fall of 1930, the then-7-year-old author witnessed his first example of the endemic ethnic and political conflicts in Eastern Europe: Polish troops marched through his village hunting for members of the more violent of two Ukrainian Separatist groups. The narrative is packed with lavish imagery of the Ukrainian countryside and is encyclopedic in its detailing of local culinary, social, and religious customs. It’s also a tale of the author’s hair-raising adventures as he moved from town to town, and country to country, trying to continue his education as Europe moved closer to war. Overall, this is not only an engaging portrait of World War II from the perspective of European civilians caught in its midst, but also a timely one; in 2015, when Russia annexed Crimea, Kochan’s daughter asked her elderly father whether he thought Russia would stop with that acquisition: “They’ll be back,” he replied, presciently. “They always come back.

In marketing and customer acquisition (the process of getting new clients), there are just as many variables that must all align to truly “knock it out of the park.” But with enough practice and enough skill, you can turn the wild world of acquisition, which will throw curveballs at you everyday, into a homerun derby, knocking offer after offer out of the stadium.

Big market ripe for disruption. You have identified a large mainstream consumer purchase and process that is inconvenient or unpleasant, and it is associated with a product that has long margins that will give you plenty of funding for both reducing prices and building a brand. 2.   Unfair advantage. You have conceived of a company position and customer acquisition strategy that will take the company from 0 to 60 because you have unique insight and ability to execute on that vision, or you have direct access to deep pockets of capital, technologies, influencers, or experts who can make your product a compelling and newsworthy breakthrough. 3.   Total experience. You have thought out the entire end-to-end consumer experience and can specifically identify how your company will radically improve over the current experience. You are capable of executing that experience from Day One. 4.   Digital savvy to scale. Your founding team has deep experience in harnessing the Internet for customer acquisition, and you have a clear sense of what digital strategy and channels you will prioritize.

2. MIGRATE YOUR PRODUCT LEK had to move away from ‘standard’ strategy towards analysis of competitors. This led to ‘relative cost position’ and ‘acquisition analysis’. Your task is to find a unique product or service, one not offered in that form by anyone else. Your raw material is, of course, what you and the rest of your industry do already. Tweak it in ways that could generate an attractive new product. The ideal product is: ★ close to something you already do very well, or could do very well; ★ something customers are already groping towards or you know they will like; ★ capable of being ‘automated’ or otherwise done at low cost, by using a new process (cutting out costly steps, such as self-service), a new channel (the phone or Internet), new lower-cost employees (LEK’s ‘kids’, highly educated people in India), new raw materials (cheap resins, free data from the Internet), excess capacity from a related industry (especially manufacturing capacity), new technology or simply new ideas; ★ able to be ‘orchestrated’ by your firm while you yourself are doing as little as possible; ★ really valuable or appealing to a clearly defined customer group - therefore commanding fatter margins; ★ difficult for any rival to provide as well or as cheaply - ideally something they cannot or would not want to do. Because you are already in business, you can experiment with new products in a way that someone thinking of starting a venture cannot do. Sometimes the answer is breathtakingly simple. The Filofax system didn’t start to take off until David Collischon provided ‘filled organisers’ - a wallet with a standard set of papers installed. What could you do that is simple, costs you little or nothing and yet is hugely attractive to customers? Ask customers if they would like something different. Mock up a prototype; show it around. Brainstorm new ideas. Evolution needs false starts. If an idea isn’t working, don’t push it uphill. If a possible new product resonates at all, keep tweaking it until you have a winner. At the same time . . .

Customer acquisition cost (CAC) reflects the average marketing cost incurred in acquiring a typical customer. An LTV/CAC ratio below 1.0 implies that a customer is worth less than it cost to bring her on board.

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Customer Acquisition Cost (CAC) is the total cost (marketing, sales and pre-sales) of acquiring a new customer. ACAC is the average customer acquisition cost. Customer Lifetime Value (CLV) is the gross margin we can expect from a customer over the lifetime of our relationship. ACLV is the average customer lifetime value.

LOW: Cost to Acquire a Customer (CAC) In its simplest form, CAC is all the costs associated with landing new customers (e.g., marketing, advertising, sales) divided by the number of customers you acquired during that period. It’s sometimes tricky to calculate because getting a handle on your marketing costs can be tricky. If you’re focusing on SEO, you may be creating all the content yourself rather than paying a writer. You may be getting a lot of your early customers from forums you spend time on or by getting in front of other people’s audiences. In those cases, the cost is your time rather than an easy-to-calculate number. It’s a lot simpler to calculate CAC if you’re running ads. Then, you can see how much you’re paying per click and track how many people convert from each source. But if you’re not in that position, valuing your time at a certain rate (e.g., $150 an hour) and taking your best guess at time and money spent on marketing in a given month can get you to a good enough estimate of your CAC. How do you know if your CAC is too high? By calculating how long it’ll take to pay back the costs of acquiring each customer. As I was first getting into recurring revenue, I thought that if I was getting $1,000 in LTV from each customer, I could spend $700 to acquire every customer and make $300 a pop. Right? The problem is that you’re not getting $1,000 every time you sign a new customer. With a $50-a-month contract, you’re getting that $1,000 over the course of the next year and a half. If you spend $700 per new customer in January, you won’t break even on those customer acquisition costs until next February (assuming the customer doesn’t churn). With venture capital, the rule of thumb is that you should spend no more than one-third of your customer’s LTV or no more than one ACV. As bootstrappers, we don’t have enough cash to wait 12 months to recoup CAC from every customer. Most successful bootstrappers I know are in the two- to six-month payback period (depending on how much cash they have in the bank). There are times when that number can get more aggressive. For example, at our peak with Drip, we could afford to spend more on customer acquisition because we had the cash in the bank and I knew the numbers in the rest of our funnel by heart. Even at our peak, though, we were only running seven or eight months out—that’s the high end for bootstrapped companies.

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