This is a guest post by Matt Wallace, growth manager at CharlieHR.
The reality of growing a business is that there are very few universal rules.
How often have you asked a seemingly simple question only to find that the (honest) answer is “it depends”?
Yet most of us are looking to achieve remarkably similar goals. For CharlieHR, and most other businesses around the world, we’re interested in how to profitably acquire customers.
Here’s how we use GoSquared to find some hard and fast answers for how to make this happen.
Measuring Customer Acquisition Cost (CAC)
Plenty of SaaS writers have written at length on the importance of measuring Customer Acquisition Cost, often with appropriately dramatic titles like “The Startup Killer” and “The one metric that can determine your company’s fate.”
So in short, CAC is important.
There are several channels available to grow a SaaS company (paid, organic, partnerships, referrals, SEO etc) and some will inevitably work better for your business model, strategy, product and audience than others.
But first and foremost, being able to measure and compare CAC across these channels helps answer an important question:
“Where is the best place to spend my budget this month?”
Hitting the limits of platform-centred metrics
Facebook is one of the best ways to reach potential customers (as their recent earnings announcement can attest). Advertisers are given a nicely designed dashboard, which shows exactly how much they’re spending to have someone click that all important “Sign Up” button.
But that’s just a sign up (CPA).
Cost per Acquisition (CPA) is not CAC (as this post from Brian Balfour eloquently explains).
Facebook can’t see what comes next. So if you’re relying on their internal metrics, you’ll only get half the story.
Tracking the full customer journey with GoSquared
Using Google’s URL builder tool, a unique URL can be used for each advertising campaign that is being run on Facebook.
When someone signs up on the CharlieHR website, we’re able to identify that person by filtering with the ‘Campaign Source’ property in GoSquared.
This is massively important to us for a number of reasons.
Inevitably, not every company that signs up ends up reaching HR heaven with Charlie.
It’s not as simple as clicking through and getting started. There are a number of offline steps that most users will have to go through before they’re fully-fledged users. Maybe an HR manager needs to sell the platform to their CEO, or a Founder has to check that we’re able to store different types of documents. Due to the sensitive nature of HR data, most people take a bit of convincing about security (something that we take very seriously).
With GoSquared, we’re able to see which sign ups are still using CharlieHR two weeks after sign up. In addition, we can see how many other members of their company have been added. This is a much more accurate way of judging how many sign ups are actually valuable to us from any given channel.
Charlie is a SaaS product with a freemium business model. We need to know how much it costs to acquire an active company and active users. Until our premium product is released this is the metric that matters to the growth team.
Using the method above we’re able to see if the advertising spend has been justified and whether it is worth investing more time into this channel.
Experiment, experiment, experiment…
Go to any digital marketing conference or meet-up and you’ll hear the word ‘experiment’ over and over again. It can actually get pretty nauseating (particularly when you’re just looking for something that’s going to move the needle that week!).
You’re supposed to be consistently experimenting with the best way to reach and acquire new users. Maximising the efficiency of limited budgets and growing the business as fast as possible.
Facebook gives advertisers many levers to pull when experimenting with the way they’re appealing to potential customers: different images, ad copy variants, multiple audiences etc (check out AdEspresso for an awesome Facebook A/B testing tool).
Finding the experiments that are working
In the same Google URL builder tool, you’re able to change the ‘Campaign Name’ depending on the experiment you’re running.
Adjust the filters in GoSquared, including the new “Campaign Name” property:
Again, you’re able to move beyond guesswork and deliver accurate reporting on what is working and what is not. Which experiments should you double down on and which should you cut immediately.
Different Facebook campaigns convert at different rates.
One very practical example of this at Charlie is whether we choose to include the words ‘free’ in the ad copy.
Perhaps you’ve already seen this ad on Facebook:
It’s no surprise that putting “free” front and centre on the ad is a great way to get sign ups and an impressive CPA.
But if those sign ups don’t covert to active companies this is just a vanity metric.
When Charlie releases our paid, premium product in 2017, GoSquared will enable us to measure the conversion % of these sign ups to paying customers. Giving us the ability to see whether someone, who signed up from a ‘free’ campaign, is less likely to convert to a paying user than someone who joined from a more generic SME focused campaign.
Increasing conversation rates with proactive in-app messaging and email
“How can I bring down CAC without changing the amount of money I spend each month?”
The answer lies in boosting your conversion percentage.
GoSquared can help here too.
Using GoSquared, you can see more than just the final result of a customer journey. You can also get to grips with how users behave along their journey.
What have your sign ups from Facebook gone on to do in your product? How many times have they logged in? Have they seen the key features that they need to see to determine whether the product could be of value to their business?
There are a few different tools that you can use in GoSquared itself to boost the number of sign ups that complete the actions you need them to.
Running a team? Save time with CharlieHR
CharlieHR is now used by over 3,500 teams, including GoSquared of course. Check out the product and sign up for a free account if you need some beautiful, free HR software for your business.