Retailer’s Perspective – Customer Acquisition at Scale

By Michael Fox | 22 Jul 2011

Tracking cost per acquisition is tricky at the best of times, Michael Fox shares highlights on how to approach tracking conversions for more focused results.

A great presentation from Florian Heinemann of Berlin-based Rocket Internet discussing how to better understand marketing performance across multiple channels.

Rocket Internet invest in some exciting European e-commerce businesses like Zalando (a Zappos equivalent in Europe), eDarling (large dating site) and CityDeal (acquired by Groupon for $100 million).

For those who don’t have the  30 minutes to watch the presentation, a quick summary:

1. Most e-commerce businesses attribute a conversion to the ‘last click’. If a customer sees a TV ad, then clicks a display ad online, before finally clicking on a search engine marketing (SEM) ad to convert, the sale is attributed to this tactic. The business will then under-invest in TV and display ads and over-invest in SEM.

2. As e-commerce businesses grow, they need to start attributing conversions not just to the last click. Instead they need to attribute a percentage of the conversion to all the touch points the customer had with the business prior to converting.

3. Once your e-commerce business can attribute conversions across multiple channels, to establish the lifetime value of customers for each separate channel, retailers need to  to measure the dollar value of each sale and also examine re-order rates via each channel. Zalando has found that the lifetime value of a customer from one channel can be as much as twice as high as a different channel.

4. With this data, you can truly measure and optimise your cost per acquisition across each channel.

5. In the questions, an audience member asked how Zalando track non-click related ads, such as a customer viewing a display ad without clicking on it or viewing a TV ad. Florian explained that this is still a challenge. They use some statistical regression analysis techniques to measure the uplift in clicks they receive when they’re spending more on non-click advertising.

6. Zalando don’t have a marketing budget, the will acquire as many customers as they can at or below their target cost per acquisition.

Florian makes the good point that getting into this full level of detail only starts to be worthwhile once you’re e-commerce business is spending $100,000’s per month on marketing. For smaller retailers like us Google Analytics have recently started trialling Multi-Channel Funnels which is a good first step in this direction.

Have you seen any other presentations or blog posts that go into detail on this topic?

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