2014 State of Customer Acquisition

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1 2014 State of Customer Acquisition New acquisition survey findings by Trendline Interactive Research study commissioned by CertainSource an ewaydirect Company

2 INTRODUCTION There is a bit of a schism amongst marketers. On one side, there are those who believe that should focus solely on retention marketing. On the other side are those marketers that use as part of their online acquisition efforts. In this debate, the latter are often accused by the former of perpetuating the spammer reputation of as a marketing channel. Admittedly, the acquisition space is rife with vendors of ill repute, and plenty of people have lined their pockets with the money of marketers hoping for a quick way to grow their prospect databases. This does not mean, however, that ALL acquisition vendors or all acquisition practices are bad! Let s face facts. Acquisition is essential to the lifeblood of any business. There are no retention marketing efforts that are not preceded by acquisition. Moreover, since the average list will lose approximately 25% of its addresses per year through the normal process of attrition, marketers need to make acquisition a regular, programmatic, and systematic part of their efforts, just to sustain let alone grow revenue. The 2014 State of Customer Acquisition report provides insight into how marketers are navigating acquisition. In this report, you will learn: Attitudes of marketers toward online acquisition The most effective paid tactics according to marketers reporting success in online acquisition How marketers are measuring success Challenges marketers face in optimizing acquisition efforts Tools marketers are looking for in third party vendors There is no retention without acquisition Trendline Interactive, Inc. 2

3 ATTITUDES Only one third of marketers surveyed are satisfied with their acquisition efforts. We asked respondents how they felt about their acquisition efforts, and sorted them into two groups: those who are satisfied with their acquisition efforts and those who are not, before going more in-depth to find out their reasoning. For those who are satisfied with their current acquisition efforts, we found that their satisfaction was directly correlated to how high of a priority acquisition was within their overall marketing strategy. Those who prioritize acquisition are more likely to be satisfied than those who do not. Furthermore, marketers that drove registration through Paid Search, Mobile Media, and Online Display reported the most success. 34% of respondents are currently satisfied with their marketing efforts. 38% of respondents report that acquisition is a high priority. 46% of marketers have concerns about the potential for negative consequences of paid acquisition tactics. 29% of marketers say they have never used a third-party vendor to assist in acquisition efforts. How satisfied are you with your current acquisition How efforts? satisfied are you with your current acquisition efforts? Very satisfied 4% Satisfied 30% Neither satisfied nor unsatisfied 38% Unsatisfied 23% Very unsatisfied 5% 2014 Trendline Interactive, Inc. 3

4 Successful acquisition requires dedication, effort, and ongoing analysis. Certain online acquisition tactics, such as list rental, have given marketers headaches in the past by damaging the online reputations of companies that use them. As such, concerns about online acquisition are understandable. At the same time, marketers recognize that online acquisition is necessary in order to grow and sustain their business. Marketers that are having the most success have moved past the challenges of yesteryear and embraced that acquisition is difficult, but that with a bit of creativity and hard work, they significantly impact the bottom line. This starts with the creation of compelling content or offers so that marketers can engage prospects with a simple value exchange provide us with your contact information and we will reward you immediately with XYZ. This allows marketers to then promote this content across a wide array of channels and monitor the effectiveness of each to continually lower their cost per acquisition. Conclusion There is a silver bullet when it comes to acquisition. The key to acquisition success is consistently analyzing performance and optimizing over time. Third-party vendors need feedback from their clients on what is and what is not working, while the marketers doing acquisition well embrace that the right third-party vendors are critical to their success. Attitudes Toward Acquisition (Percentage that Agree with Each Statement) Attitudes toward acquisition We analyze performance to optimize our strategy overtime. 54% We are concerned about the negative consequences (e.g. poor deliverability, impact to reputation or credibility) of paid acquisition methods (e.g. list rental, co-registration) 48% We focus primarily on organic acquisition efforts. 45% We have never used third party vendors for acquisition purposes. 29% Using third party vendors for our acquisition efforts in the past had negative and/or no impact on our business, so we don't plan to use them in the future. We don't focus on acquisition efforts because our business seems to be sustaining and/or growing without it. 14% 2014 Trendline Interactive, Inc. 4

5 CHANNELS Paid tactics get results. The most commonly used marketing channels for acquisition are websites, social media, and . While there is something to be said for free acquisition tactics, organizations seeing the most success in the acquisition space are those that are paying for it. 77% of all marketers currently use at least one paid acquisition tactic 85% of marketers that are satisfied with their acquisition efforts use at least one paid acquisition tactic 41% of all marketers use online display to drive online registration the most popular tactic 33% of all marketers pay for placement on social media sites the second most popular tactic Marketers that are satisfied with their acquisition efforts are more likely to use online display, mobile media, and paid search to drive registration Which of the following acquisition tactics do you Acquisition currently tactics use? used Please select ALL that apply. Online display advertising to drive online registration 41% Paid placement on social media sites Paid ads on social media sites that drive to a signup form Sharing limited content online with links to register/ download Paid search advertising that drives to a signup form Banners promoting your online program within mobile websites Banners promoting your online program within mobile apps None of the above co-registration Banners promoting your online program on 3rd party blogs 22% 18% 33% 31% 28% 27% 26% list rental append to offline addresses 13% 14% 2014 Trendline Interactive, Inc. 5

6 Marketers who are satisfied with their efforts are more likely to use paid channels to drive acquisition, and they leverage more channels to do so. Within this group, 56% use online display to online registration compared to only 34% of marketers that are not satisfied with their acquisition efforts. This suggests that using online display to drive registration is effective given that those experiencing the most success use this tactic more frequently. In contrast, there was little difference in the percentage of marketers who use paid placement on social media sites based on their satisfaction with their marketing efforts, which may indicate that this is a me too tactic. Tactics & Channels Used Significantly More by Marketers Satisfied with their Acquisition Efforts Tactics used most by marketers satisfied with their acquisition efforts Satisfied Not Satisfied Paid search advertising that drives to a signup form 41% Mobile media 21% 39% Online display advertising to drive online registration 34% 56% The key to success is finding the right paid tactics. Not all acquisition tactics are going to work for all companies. Marketers need to spend time conducting ongoing analysis in order to identify the right acquisition tactics for their organization Trendline Interactive, Inc. 6

7 MEASURING SUCCESS Quality over quantity Overall, marketers are looking at quality and financial metrics to gauge overall ROI and the effectiveness of their campaigns. Historically, marketers were most concerned with the quantity of leads as a measurement of success. But our study found that only 8% of respondents use quantity as the primary measure of their acquisition efforts. This shift toward qualitative and financial metrics in determining effectiveness leads us to believe that marketers approaches to acquisition are maturing. What measure do you use to gauge the effectiveness of your organization's acquisition Top measure of effectiveness efforts? Overall ROI 22% Revenue from Revenue new from leads new / customer leads / value customer value 19% Quality of leads Conversion 16% 16% Budget efficiency & effectiveness 11% Quantity of leads 8% Reduction of ad spend 3% 51% of marketers use third-party vendors in their acquisition efforts. While it s important to track campaign level performance, it s also important to track each third-party vendor s performance to determine if each vendor is serving the organization well. This is especially true in a climate where some mistrust of acquisition vendors still exists and marketers know there are potential risks when engaged in acquisition marketing. 59% of respondents track individual campaign performance. 32% assess individual vendor performance Trendline Interactive, Inc. 7

8 Unbelievably, of marketers do not measure the effectiveness of their acquisition efforts. This number drops to 10% among marketers who ve made acquisition a priority. But this raises the question, how can marketers know if their efforts are successful if they re not looking at results? Overall, marketers are becoming more sophisticated in their acquisition efforts, but there are still those operating on faith rather than facts. How do you currently measure the effectiveness of your acquisition efforts? Please select all that apply. How effectiveness is measured We track individual campaign performance 59% We track individual source performance 47% We track individual vendor performance 32% We conduct high-level performance assessment of our overall 32% We do not measure the effectiveness of our acquisition efforts We assess reduction in ad spend 15% 2014 Trendline Interactive, Inc. 8

9 CHALLENGES The Big 3 The biggest challenges marketers face in their acquisition efforts have to do with resources, and most cite three main challenges: money, time, and talent. 52% say financial resources are very challenging 47% consider lack of time as a significant challenge 40% cite the lack of trained staff as a major obstacle We can identify the good leads. We can identify the bad leads, but finding those in the middle is a challenge. - Survey response High-value vs. marginally engaged leads To date, more marketers believe differentiating between high-value and marginally engaged leads is somewhat challenging, more so than any other area we asked about. 22% of marketers say differentiating between high-value and marginally engaged leads is a significant issue. 65% report that this is somewhat challenging. What would you consider to be the challenges of improving your acquisition efforts? Challenges to improving acquisition Not Challenging Somewhat Challenging Very Challenging Resources - budget 10% 38% 52% Resources - time 9% 44% 47% Resources - staff / people 14% 46% 40% Proper tools (e.g. software, database) 25% 46% 29% Keeping up with the speed of attrition 22% 51% 27% Analytics / data science 54% 26% In-depth assessment of top / bottom performing sources 19% 57% 24% Strategy 25% 51% 24% Trustworthy vendors (i.e. vetted and legitimate) 31% 46% 23% Assessment of high-value leads vs. marginally engaged 13% 65% 22% 2014 Trendline Interactive, Inc. 9

10 We believe this issue will become more of a challenge in the coming year as marketers acquisition efforts mature. Marketers will start to demand more of their tools, and need more help navigating the middle ground. It is relatively simple for marketers to identify low-quality leads, but as marketers look to optimize performance, it will become increasingly important to identify marginally engaged, yet potentially valuable, leads and nurture them properly over time. How challenging is it to find the right tools? Marketers are split on whether finding the right tools is a challenge or not; 29% say it s very challenging, while 25% maintain that it s not a challenge at all. This suggests that while there is a significant need for better tools in the acquisition space, there are definitely marketers who feel their needs are being adequately served. We see this as an opportunity for a strong new vendor to emerge on the scene and introduce new tools that serve marketers across the board by raising the expectations of acquisition toolsets Trendline Interactive, Inc. 10

11 TOOLS What do marketers want/need in a toolset? Overall, we found marketers are most concerned with optimizing leads. 47% of marketers feel that optimizing for high-value leads is a must-have Only 6% feel lead optimization is unnecessary Likewise, while minimizing the acquisition of low-value leads falls lower on the list of must-haves (32%), the fact that only 7% of marketers focused on acquisition say this is not needed suggests that acquisition vendors must include this capability into their platforms. Marketers are also very concerned with analytics. While the ability to conduct analysis based on lead quantity and quality metrics are important, marketers are looking for qualitative metrics first (presumably because quantitative metrics are easier to collect). Budget Tracking also ranks high on this list of must haves, making it safe to assume that ROI-oriented metrics that marry qualitative metrics and budgets will also be important. 39% say data cleansing and lead validation are must-haves. 26% say employing strict standards around managing performance and risk are must-haves. Many marketers recognize the potential risks associated with third-party acquisition, and are looking for an acquisition platform that addresses these risks and offers solutions. The key is to offer data validation and standards that do not limit marketers to a pre-defined set of vendors or acquisition tactics, so that marketers can elect to work with new tactics or off-list vendors as they see How fit. would you categorize the following features of an acquisition platform for your company? (High Priority) Acquisition platform needs Don't Need Nice to Have Must Have Ongoing optimization for high value leads 6% 41% 47% Lead QUALITY data analytics 8% 36% 46% Lead QUANTITY data analytics 13% 33% 44% Integration capabilities 9% 36% 41% Advertising budget tracking 13% 38% 40% Data cleansing and lead validation 17% 34% 39% Manage online media mix across multiple vendors 39% 34% Minimize acquisition of low quality leads 7% 49% 32% Employs rigid performance Employs rigid and performance risk standards and for risk all vendors standards for all vendors 25% 32% 26% Ability to make media buys 25% 43% 24% 2014 Trendline Interactive, Inc. 11

12 AUDIENCE Consumer Marketers For the purposes of this research project, we were only interested in marketers who deal at least to some degree with consumer marketing (not pure B2B marketers). Survey deployment occurred between August 21, 2014 and September 10, 2014 through a large online panel of marketers with a total of 288 completed responses. All of these marketers play one or various roles in assisting their organization in growing its CRM database/marketing list, or acquiring new leads for future conversions. The majority (67%), identified themselves as Marketing Decision Makers, and 55% said they implement acquisition efforts (e.g. creative, integration). Many of these marketers were also regularly involved with multiple channels: 63% of respondents are regularly involved with and social media marketing 55% social and online advertising 54% and online advertising 48% and event marketing 41% and direct mail Characteristics of companies focused on acquisition Companies focused on acquisition tend to be larger. Companies with 250 or more employees were much more likely to be focused on acquisition than companies with less than 25 employees. They were also from similar, key industries: finance, healthcare, travel, and retail. Industries such as non-profits, manufacturing, and entertainment were less likely to be focused on acquisition. Companies that prioritize acquisition (63%) invest in analyzing the effectiveness of their efforts in order to optimize their strategy. They are also less likely to let past negative experiences with third-party vendors affect their views of acquisition Trendline Interactive, Inc. 12

13 About Trendline Interactive Trendline Interactive is a full service marketing agency. We know . We don t follow best practices, we create them. Our team takes a creative, innovative approach to your business based on your needs and your customers. We build great programs on a foundation of cutting-edge creative, technical elements, and strategy working together to achieve your objectives. We conduct ongoing research on marketing trends and consumer behavior that provide the basis for our unbiased strategic advice to companies on how to grow their brands through better engagement with subscribers About CertainSource, an ewaydirect company CertainSource, an ewaydirect company, develops and delivers cutting-edge customer acquisition and marketing solutions for leading brands and businesses worldwide. Founded in 2001, the company transforms digital engagement through a suite of products. CertainSource Acquire is an omni-channel Customer Acquisition Management platform (CAM) for B2C marketers providing full transparency and actionable insights across the entire customer acquisition ecosystem, enabling marketers to improve new customer ROI as much as 400%. CertainSource Engage is an enterprise ESP platform offering superior performance through real-time behavioral triggers, and five levels of social integration that can boost revenue by 40% or more. For more information see Trendline Interactive, Inc. 13

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