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Unsexy Conference August 8, 2013
paid marketing: running the right experiments to grow fast
• Darian Shirazi, CEO & Co-Founder, @Radius
• Radius is a Software-as-a-Service product that provides sales and marketing
professionals with small business leads and customer intelligence
• Background: early @Facebook, worked @eBay
• Investor in: @Homejoy, @MessageMe, @Fresh, @Udemy
• Experience building startups
about me
Theme: Paid acquisition is a necessary evil for all SaaS, subscription-based, or enterprise software products.
Why is paid acquisition required? Churn will catch up with you.
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Organic Leads
Total MRR
• “CAC”: Cost of Acquiring a Customer
• “LTV”: Lifetime Value of a Customer
important definitions
• CAC evaluates your marketing organization
Are we spending too much to acquire a customer?
Which channels are more economical than others?
How quickly could we grow if we spent x?
How big is the market for our product?
• LTV evaluates your product organization and CAC ROI
How long do customers stay with us?
How long does it take to get paid back for the customers we acquire?
Which channels lead to the most loyal customers?
Are there problems with the product that reduce LTV?
CAC & LTV are key performance metrics for any “unsexy” business
case study: radius
Hypothesis: We think our product is great and we believe paid marketing channels can allow us to grow significantly faster.
Step 1: What are competitors doing with paid acquisition on adwords?
Source: SpyFu and General Industry Standards
Step 2: run experiments
Step 3: measure cac by channel
If your LTV exceeds your CAC by at least 30% you have a great business. Optimize everything until you do.
If you do this right, here’s what your new graph looks like
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Organic & Paid
Total MRR
• Marketing Lifecycle Management: Hubspot
• Landing Page Optimization: Optimizely is a MUST
• Analytics: Google Analytics through Segment.io
• Remarketing: Google Remarketing
• Social Retargeting: Perfect Audience
What tools do you recommend that can help me optimize?
• Potential Ad Problem: Targeting the wrong verticals
• Product MVP issue: you haven’t found product/market fit
• Sales issue: your first-responders haven’t been trained well
• If your CAC is greater than your LTV and the CAC is equivalent to less than
the 3 month cost of your service, you might also have an account
management issue
I’ve optimized to like crazy but my cac is still greater than my ltv…
