When the Nightly News with Brian Williams publishes an infographic summarizing our declining attention spans at work and at home, it’s definitely time to think about marketing and customer acquisition costs. Brian’s data comes from the work of Joe McCormack’s The Brief Lab – an organization dedicated to lean communication. “Brief is better,” is Joe’s philosophy about communication. Interesting.
I’ve encountered many business plans describing PPC customer acquisition plans illustrated in orderly, multi-year graphs. The supporting analysis typically points to favorable CAC and LTV trends that assume organic acquisition will occur through viral adoption once the purchased customers spread the word. Purchasing customers is often the seductive remedy for overcoming the problem of abundant choice and scarce attention.
This type of planning seems pre-processed to be sympathetic to business executives and investors who respond to analysis purportedly grounded in math. The future is uncertain of course, but spending to acquire customers contains the potential rot of being factually correct yet inaccurate. The future cannot always be determined using fact-based analysis – data is best used to address risk. For example, companies that rely on large customer aquisition budgets must operate at a higher margin - thereby creating ideal conditions for an opportunistic cost cutting competitor.
There is an inherent contradiction in the words “purchased customer” - how neatly the words fit the complicated scheme. The contradiction surfaces when the excitement over rapid customer growth fades and the purchased customer underperforms relative to her organic counterpart - and in almost every case – LTV tumbles. (And this assumes you’re set up to track attribution and paid vs. organic search synergy.)
The data show that organic customers convert at a higher rate, have lower churn and stick around longer than purchased. After all, an organic customer arrived at your door to satisfy a want or desire; the purchased customer arrived using a calculator. The distinction is that organic customers will have a story to tell her friends/colleagues and a bias in favor of her current choice – all of which leads naturally to organic growth.
Squeezed between narrowing attention spans and risky purchased customers, the options for long-term growth narrow quickly. The high quality challenge is to invest in earning customers through organic means as a strategy. While earning customers is not free, learning how to attract customers organically taps an almost unlimited resource while reducing risk. After, learning how to attract them means you understand their problem. Joe McCormack would summarize by saying, "It’s optimal!"