November 23, 2009

Optimizing Customer Acquisition

Buy the book on Amazon.com, or buy the Kindle version here. Finally, e-mail me for a copy of a free OMS spreadsheet so that you can follow along with our examples.

Ok folks, open up your spreadsheets. Take a look at the five year sales projection for this business.
  • Year 1 = $75.9 million.
  • Year 2 = $70.4 million.
  • Year 3 = $66.7 million.
  • Year 4 = $64.4 million.
  • Year 5 = $62.9 million.

Now let's try something different. Go down to the customer acquisition portion of the spreadsheet, and do the following:

  • Enter "0" into cell B452.
  • Enter "10,142" into cell B441.
  • Enter "11,463" into cell B443.

Look at the five year trajectory of this business:

  • Year 1 = $75.8 million.
  • Year 2 = $70.5 million.
  • Year 3 = $67.1 million.
  • Year 4 = $65.0 million.
  • Year 5 = $63.9 million.

This doesn't look like much of a difference, does it? Of course, we're only looking at changes to three of 240 different customer acquisition segments.

Here's the point I want to make. Those of us in the Web Analytics and Online Marketing community do everything possible to improve conversions today. This creates inefficiencies in our business. Use the OMS framework to understand the customer acquisition strategies that improve the health of your business long-term.

Think about being in this business five years from now ... having an extra million in demand might mean an additional $400,000 in profit, enough money to save five jobs.

All of these little details add up over time. When we optimize our business for today, we potentially cost ourselves our job in the future.