unsexy conf 2013: darian shirazi, radius

Unsexy Conference August 8, 2013

paid marketing: running the right experiments to grow fast

•  Darian Shirazi, CEO & Co-Founder, @Radius

•  Radius is a Software-as-a-Service product that provides sales and marketing

professionals with small business leads and customer intelligence

•  Background: early @Facebook, worked @eBay

•  Investor in: @Homejoy, @MessageMe, @Fresh, @Udemy

•  Experience building startups

about me

Theme: Paid acquisition is a necessary evil for all SaaS, subscription-based, or enterprise software products.

Why is paid acquisition required? Churn will catch up with you.

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Organic Leads

Total MRR

• “CAC”: Cost of Acquiring a Customer

• “LTV”: Lifetime Value of a Customer

important definitions

•  CAC evaluates your marketing organization

Are we spending too much to acquire a customer?

Which channels are more economical than others?

How quickly could we grow if we spent x?

How big is the market for our product?

•  LTV evaluates your product organization and CAC ROI

How long do customers stay with us?

How long does it take to get paid back for the customers we acquire?

Which channels lead to the most loyal customers?

Are there problems with the product that reduce LTV?

CAC & LTV are key performance metrics for any “unsexy” business

case study: radius

Hypothesis: We think our product is great and we believe paid marketing channels can allow us to grow significantly faster.

Step 1: What are competitors doing with paid acquisition on adwords?

Source: SpyFu and General Industry Standards

Step 2: run experiments

Step 3: measure cac by channel

If your LTV exceeds your CAC by at least 30% you have a great business. Optimize everything until you do.

If you do this right, here’s what your new graph looks like

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Organic & Paid

Total MRR

•  Marketing Lifecycle Management: Hubspot

•  Landing Page Optimization: Optimizely is a MUST

•  Analytics: Google Analytics through Segment.io

•  Remarketing: Google Remarketing

•  Social Retargeting: Perfect Audience

What tools do you recommend that can help me optimize?

•  Potential Ad Problem: Targeting the wrong verticals

•  Product MVP issue: you haven’t found product/market fit

•  Sales issue: your first-responders haven’t been trained well

•  If your CAC is greater than your LTV and the CAC is equivalent to less than

the 3 month cost of your service, you might also have an account

management issue

I’ve optimized to like crazy but my cac is still greater than my ltv…

Contact me: @darian314

darian@radius.com http://angel.co/darian314

Q&A