0:00
[MUSIC PLAYING] Hey, welcome to module 4, lesson 4. In this lesson, I'm going to tear down what we did a Karmaloop to figure out who our whales are into acquire more of them to grow the business. Remember from last lesson whales are very different from minnows, and, if you want to grow, it's a lot easier to achieve that growth if you direct your acquisition efforts at acquiring whales instead of minnows. The way you do this is you lay out all your acquisition programs, and you conduct what I call an acquisition audit.
0:31
Try to figure out which campaigns which ads are driving the most whales. At Karmaloop say we had two ads on Facebook, very similar ads, similar cost per customer acquisition comparable conversion rates like all the metrics on the surface looked the same. What we then did, was tie our customer lifetime value back to each ad, and we found that the ads would drive very different proportions of customers.
0:59
So, in this case ad B would drive a little bit more whales than ad A, it's not completely binary, it's not either or, you just find one ad typically is a little bit better than the other in driving your high lifetime value customers. So what that told us was to redeploy our dollars from ad A to ad B.
1:22
We also did this on the level of campaigns. So we laid out all of our marketing campaigns from our newsletter to YouTube, to ads, affiliate programs, and we calculated the lifetime value per campaign. And it became blatantly obvious to us that we needed to deploy our marketing dollars from things that weren't working, like our referral programs to some extent our affiliate programs, redeploy those dollars into YouTube and into our newsletter program.
1:52
In essence, I told the team we had to become a newsletter first business, we had to focus on our newsletter and nurturing those customers just like a catalog retailer did. And the results kind of speak for themselves. This is what changed the business, was reallocating our marketing dollars from low ROI programs to high ROI programs in essence to programs that were generating more and more of our whale customers.
2:21
If you're just starting this kind of analysis, I recommend building a simple look like audience in Facebook off of not all your customers, but off of your top whale customers. Sought your customers by total spend, pick off the top 20% in build a lookalike audience off of that, don't build the lookalike audience of all of your customers because you're going to include your minnow customers with your whale customers, if you do that.
2:47
So just to recap, don't acquire; acquire whales and Karmaloops acquisition audit it gives you a way to do this. I'm going to put the actual how to in the show notes for this lesson, but I hope it serves you well. And this is the fourth and final module. And it's the fourth and final lesson, in the fourth and final module. And I hope I've given you a good idea of this private equity approach kind of what we do when we buy a company for the first 100 days.
3:17
To focus on these three revenue multipliers and grow the business. Those three multipliers are number 1, purchase frequency. Number 2, average order size. And number 3, the total number of customers. You preferably want to work through them in that order. My name's Drew Sanocki, I blog at nerdmarketing.com If you have any questions about this class or anything else regarding e-commerce, shoot me in email any time, I'd be happy to help.
3:44
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