How Facebook Cut This Company’s Cost Per Customer by 60%

This is the first case study interview in the relaunch of my podcast. And yes, a lot of my podcasts start as videos. :-)

Real companies, real campaigns, real results.

One of the biggest problems we struggle with these days is an overwhelm – too much information, too many ideas, too many platforms, too many strategies.

What actually works?

That’s what we’re going to talk about in these case studies.

I think it’s time for social marketing to mature. We’re going to talk to companies that are doing big things in social media, and getting quantifiable, measured results.

INTERVIEW:

Jonathan Leake (Director of Digital Marketing for DirectBuy): In the first six months of doing Facebook, we drove our cost per lead down by 84%, which is massive. I mean, we’re talking in dollars and cents, we’re talking – prior to initiating the Facebook campaign, we were well over $1,000 at a cost-per-member perspective, and now we’re sub $400 on average.

Brian Carter: That’s crazy.

Jonathan Leake: Yeah, cost-per-member is crazy. Our cost-per-member across all our media spends, and all our channels – and this is a very generalized number, so we can get very finite based off of channels. Prior to really initiating social, we were over $1,000. Today, if you look at all of our channels combined, we are generally lower than $200.

Brian Carter: We got to work with DirectBuy on this stuff, and what we’re going to talk about today is some great attribution stuff, right? Jonathan has done a great job with all of your data partners, your analytics partners of identifying what’s really going on. So many people use social, and no matter what they’re doing, they don’t really know what effect it’s having.

Jonathan Leake: That’s totally true. I mean, a lot of people just – they have a lot of money and I think it varies by the size business that you are. Generally, the larger business that you are, the harder it is to attribute things so you use tools like Adometry, which is a wonderful tool to use, but in my experience with different brands, you’re making huge financial decisions with 10-15% of data. That’s a lot of data that you’re missing. The opportunity with that other 85% of the data that you’re missing on is huge.

Where we were struggling as a business, is that we didn’t really have a really good attribution path or report to really tell us what channels were pushing and pulling. If you think about media, you want to push and pull different levers based off what’s working. Sometimes you actually want to push a lever further out, that’s actually not working for brand reasons. A billboard is a perfect example in every day.

We’re like, “Why do we want to put a billboard up on the street?”

“Because Coca Cola is on the other side of the road, and I’m Pepsi.”

You just need to be there.

When you want to get down to conversion and lead gen, it’s another ball of wax. Where do I want to put my efforts in? In this case, for us, it was social. It was an area that we knew, based off our experience working together. We knew that we could drive a lot of brand-awareness. We knew that we could drive leads at a really efficient cost. It just was a question of, “How was it going to impact our business?” And the results are huge.

Brian Carter: Let’s go back. What was Direct Buy doing before with social, if anything?

Jonathan Leake: Previously, we were really community. It was about engaging members, getting them to work with our page. We’ve had a brand reputation issue in the past, so we try to make sure that we put customer service first. We want customers to come to our page. We want them to ask questions, and have our customer service team answer those questions. It really was not about a membership conversion vehicle. We didn’t use Facebook as that. We were using it as an engagement tool with our existing membership. Some of the type of content that we put out there is inspirational for folks that like to do things by themselves, like DIYers and things of that nature.

I would say the opportunity – and as you and I know – that Facebook and social in general has become a pay to play kind of space. If you want to actually drive your member engagement up, if you just want to drive your page engagement up, you have to pay just to get your post shown. If you want to use social as a lead acquisition vehicle, then you can also do that too, but you also have to pay. Your organic stuff, that you can do, can certainly help that but it’s an assisted conversion. It’s a question of, “How does pay change the algorithm for you, within social?” It can certainly do a lot of good things, and that’s where your team helps us out a lot.

Brian Carter: We did several things. Number one, we identified who is the best buyer. We took all Direct Buy’s e-mails, we uploaded them. We looked at members who stuck versus members who didn’t stick versus people who didn’t become members. Then we looked at the difference between who those people were. That helped us target the ads better. I always tell people now, I’ve summarized it. Advertising is instant- targeted- visibility, whereas organic is like, “Uhh, we might reach some people. We don’t know who, and we don’t know when.” That’s the problem with organic.

The other thing, too, is that there’s this black box. You identified through the attribution study that social is often the first touch. Google is often the last touch, but in between what was it that increased all the Direct Buy searches? Was it the brand reputation stuff we did? We did a number of different awareness and engagement campaigns. We know they all helped, we just don’t know which one helped the most.

Jonathan Leake: Right, and that’s actually what we’re working on right now. We’re working with our analytics partner to get better attribution. Out of every dollar, if you’re thinking about a linear attribution model, that’s generally a 40/40/20 split. First click gets 40% of your dollar. Last click gets 40% of your dollar, and the remaining channels get 20, so you spread 20% across all the other channels.

What we know from our experience, is that sometimes it’s non-branded that actually influences people to come into Facebook. Doing a search for a product on non-branded might just be for furniture in a particular location – let’s say furniture in Charlotte, NC – and then they go into Facebook and they see our ad, because that influenced what happened in Facebook. All of a sudden, we show up because we targeted furniture. Then, they engage with our ad. Then the go back out online, and they’re like, “Oh, who is this Direct Buy?” Then they do a search for Direct Buy Furniture, and then they learn about our business and they come to our website. That’s a general path for our business, and how someone learns about us.

We’ve done a good job with content online. Pinterest helps us out a lot with getting other content out there. Inspiration Moments, our blog, does a lot of good work there too. The search team that we work with has really put together a lot of good content on our blog about things like a man-cave – how to make the perfect man-cave. I know it’s a cliché type thing, but let’s be honest here. We all want a man-cave in some way, shape, or form – or I want a really awesome garage. Take your pick, which it is.

Content is what’s driving people into the other channels, in addition to paid. Paid just influences where people go organically. It’s being able to have the right content in place across the other channels that drives them back in. Maybe it’s through another paid channel, but often it’s direct. When I say direct, I mean people literally just type in your domain name in their address bar. That’s the ultimate goal, at least for us because that allows us to tell our best story.

Brian Carter: Why do you think Facebook had such a big effect on the cost-per-lead, cost-per-member?

Jonathan Leake: I think the targeting is the best element. You can do targeting in other markets. You can do targeting in Google, but you have to pay a lot in Google’s world to actually utilize all the functionality that’s available. It takes a really heave media spend to be able to target what you want. Say, for example, that you want to target people with a FICO score, which is something that you do. It’s a cohort, of sorts, that you definitely want to hit if you’re in our market. If we can target people by FICO score, that would be fabulous. It helps us make sure that the people that want to sign up for membership can continue to be a member of us and also have disposable income to be able to take advantage of the savings that we offer every day.

Facebook was huge for us because we were able to look at demographic information that’s not normally available in other sources. Household income is one. That’s generally something that you would get through a business that does FICO scoring – like an Experian. We could take household income, geographic locations – if they happen to be within a territory that we have a club located, which helps amplify the social footprint, and the digital footprint of the business. These are all things that are relevant to what we have going on.

What’s also great for the member profile is that we can actually pull sales data, as in if a lamp happened to be the most popular selling item, then we can change our creative up in Facebook very quickly to identify people that like lamps. You have people that are just very passionate, and I always call them passion-points, and Facebook allows you to really tap into those passion-points really easily. That just amplifies your ad work – what you’re doing within advertising – really well. It’s creative and target all in one.

Brian Carter: I was thinking about brick with “I love Lamp” when you said that.

That’s true and I don’t know if everybody knows that. You can find out people’s income-level from Facebook, on insights. Or that you can target people with Facebook ads by income, by net-worth, or by the value of their home – which have been huge. Like you said, we discover things about – It’s interesting because maybe it’s not the type of furniture that they end up buying, but we discover the type of furniture that leads them to enter their lead information, which may be different from the coolest-looking furniture. It may not be what you expect, and we get to find that out.

Jonathan Leake: Yeah, I’m always amazed that we’d like to think – I personally like modern furniture, but I’m always amazed at how much Americana is out there. When I say Americana, there’s a lot of tattered American flags that are ordered all the time.

Brian Carter: Yeah, and there’s a lot of brown furniture, and comfortable stuff that looks like I could lay down on that and it would be comfortable, as opposed to – We’ve even had people on the Facebook posts go – I don’t know if they’ve said this but they’re like, “It looks I could actually injure myself on that furniture. It’s too sharp.” Or “It’s too white. I’m going to spill juice on it immediately.” We learn a lot of stuff from the posts, and we’re showing them to the best target customers so we’re actually learning what the ideal customer thinks – which is great.

Jonathan Leake: I think what was really interesting, when we first started as a business you do your research and you identify who your customers are. We have four different sets of people that we like to look for. I think what was interesting, though – there’s this argument in the marketplace that you should always be going after millennials. I think millennials are phenomenal people – lots of wonderful ideas, but I have to tell you; millennials right now, today, they’re not our core customer. That’s one of the things we were able to identify. There is a millennial customer that is right for us, but most millennials haven’t experienced the life-moments to really take them to a place where they could really take advantage of our membership in the best way that they could.

Brian Carter: Yeah, and they haven’t had the opportunities. They had the millennial story. We came out of college, there was no jobs. They economy was horrible. That’s what I tell people. “Hey, yeah I’ll give you some millennial data here. The data shows that they don’t have a lot of money.” Maybe they will be the next big customer. There are a ton of them, and they’re going to inherit their parent’s money. So in ten years, fifteen years, maybe they’ll have some money for a while. But right now they’re not a good customer for a lot of different things.

Did you want to share any of those slides, any other thing we haven’t covered yet on those?

Jonathan Leake: Yeah, let me pop up the slides real quick.

Brian Carter: We had Jonathon present at Social Media Marketing World. I had two panels. I had a Facebook panel, a Twitter panel – all corporate stuff. It was a lot of fun. I’m going to have some more of those people in interviews like this.

Jonathan Leake: This is a quick thing. We we are able to identify in a super quick way is, here is our 84% reduction we attributed directly to Facebook because we were only doing advertising in Facebook. We’re not spending money on Twitter, or LinkedIn, or any other place that we could acquire people socially. On the flip-side, what we were able to do is really target the fact that our most inefficient channel, as a result of this, was non-branded pay-per-click. What we did, is we actually cut out our non-branded pay-per-click and it reduced our overall cost-per-lead by 60-70% in just four months. What we talked about originally was 84% reduction in our cost-per-lead. Our member acquisition costs dropped by 80% as well.

Brian Carter: That’s huge.

Jonathan Leake: This is how we did it. In month one, we set benchmarks – super duper important. If you don’t have benchmarks, you should set them now. Even if you don’t have any research, just set them. I’m sure you have some data to establish them. When we went out of the gate, we were looking at trying to get a $40 lead. This gives you an idea, in our lead generation, how it works. We started out, in month one, at $164 a conversion. Month two, we ended up figuring things out a little bit more in our targeting. Our spend ratios and everything we were doing. We ended up with $25. And by month three and month four, we literally were able to achieve a $4 conversion. It’s completely outstanding to see what you can do just by focusing in on the data, which is really important.

This gives you an example of what we actually set. When we put the program together, we worked with you. We ran a full digital audit across all our channels. We looked at what we are trying to actually achieve. These are the four things. We’ve got engagement – 20-50% pulls-per-lead in month one. We were already able to achieve that goal. We were able to achieve the engagement rate that we wanted. As you can see, in month four, that went up in terms of our engagement rate. That’s great.

Then you get down to leads. You have, $40 was our benchmark. Month one wasn’t so good. $106, but by month four, we’re down to $7.45. That’s fantastic. One of the biggest challenges that we had was trying to figure out how to get quality leads in the door. We were able to get a lot of leads, but the question that we had was – of the people that give us phone numbers, how many of those people actually show up at the door?

That’s kind of a big deal. At the end of the day, we really need to make sure that when people become a lead, they actually want to follow through on the appointment that they made with us. It’s a pretty common experience these days to not have that happen. People literally just don’t show up for their appointment. It was top of mind when they actually became a lead, but you didn’t give them a conversion event to do anything other than become an appointment. That’s not what they wanted to do. Maybe they just wanted to sign up right now. That happens all the time, and now we’re trying to refine that process to make sure that the lead that’s coming in the door is the best quality lead to enable our phone sales team to actually work with a lead and convert the lead.

On the flip-side, if you don’t happen to want to engage with actual people, which is more and more common. You just want to text, and you just want to chat. You really just want to be digital. You don’t want to have human interaction, but you want digital human interaction. If that’s how you want to convert into a customer for someone, then we need to give them that opportunity. That’s what we’re working on actively as a business – to make it easier to become a customer.

Brian Carter: That’s the next frontier. Cool. Awesome. I think that pretty much covers it. Thanks for sharing all that info. Test everything. Track it. Analyze it. Do better. Any final words?

Jonathan Leake: One of my mantras is – Launch, measure, rinse and repeat. You’ve got to fail fast, and you have to learn quickly. The only way you’re going to do that is you’re going to dive into the data, and make sure you’re measuring things. Make sure you’re setting benchmarks. If you’re not doing that stuff, find a way to do it. It’s really, really hard but it’s also super easy. It’s the same way that you’re going to grow in life. If you don’t ever say that you’re going to graduate high school, you’re never going to graduate high school because you’re not challenging yourself. You want to graduate college, well set the goal and you’ll make it happen. It’s not easy. No one said anything is easy, but you’ll make it right and you’ll figure out what works to get to where you want to be.

Brian Carter: Awesome! Jonathon Leake, Direct Buy. Thank you very much.

Jonathan Leake: You bet.

TAKEAWAYS

Some of our main take-aways from this are

Number one, Facebook audit can be huge to help you identify who your best customers actually are.

That can be super valuable for a couple reasons. Number one, once you know who your best customer is, in terms of the data, then you can ensure that you’re not targeting the wrong people, and that everybody in your organization is focused on the ideal customer. Then you can use that information to target your ads to the right people. You can make sure your content gets in front of the right people. Then, you can also make sure that when you get feedback about your content, that feedback is coming from your ideal customer, not just from anybody. You don’t want to go crazy with, “People don’t like this or that info-graphic, or that blog post,” and they’re not even your ideal customer. That’s a huge thing to start with.

This Direct Buy case study, for us, is one of our first huge end-to-end things where multiple strategies, multiple tactics, all in place and we saw that having everything going together created a gigantic lift in a lot of ways, for the entire business.

The second thing we saw was that posting in a lot of different ways – for brand reputation, for engagement, and getting across the brand’s value proposition and unique selling proposition really helped soften up the target.

That led to more searches for the brand name. It led to a lower cost per customer acquisition overall, and also allowed us to even stop running certain other types of advertising – certain types of Google ads that were very expensive. We decreased our awareness costs. We decreased other costs. We created more customer awareness. We got them ready to buy sooner. We really made Facebook the most efficient and effective first-touch channel online.

The third things we did was, we found out that Facebook, again – as it has been for many, many of our customers, both B2C, B2B – is a very, very effective, low-cost way to get leads.

Not only can you get customer sales, eCommerce, members, but you can also get a ton of leads for your sales people to contact.

What was really most interesting to me, though, was that by doing everything – from the audit at the beginning, to the posting engagement, the customer targeting, the lead gen – doing everything together had a gigantic effect for their business. We have other clients who sometimes engage us for just one thing. Maybe it’s just the ads. Maybe it’s just the audit. Maybe it’s just posting. They don’t do the entire system of things that is Facebook marketing. We got to see the gigantic effect for using all of the different strategies that Facebook has available. It had a gigantic effect, so we’d love to do that for more businesses – to put everything into play.

What can you do with this information?

• I definitely encourage you to check out Facebook audience insights. Upload your e-mails, if you have them – your buyer e-mails, your lead e-mails. Analyze the difference between your buyers and your leads, and your fans, and people who just like your competitors, or people who like things in your niche. Find out who your ideal customer is.
• Do a lot of posting to your ideal customer. Learn what they like and don’t like.
• Make sure you use ads, because Facebook is pay-to-play. You have to use ads, and like Jonathon said…
• you’ve got to test. That’s fundamental to everything we do. While we’re getting results, while we’re getting engagement, leads, and sales, we’re also always learning because we’re trying different images, different messages, different ways to target that ideal customer. You always want to be learning.

That’s what you should do with this information from this case study.

I hope it was useful to you and I look forward to bringing you the next one.

See you then!