Ralph Burns's ad agency is all about customer acquisition. One of their recent successes is a 28X result for a client. And Ralph is giving us a behind-the-scenes look into how they did it.
Get an hour-long tour through building their customer acquisition funnel, the kind of digital advertising they used, and their customer acquisition cost vs lifetime value of the client.
Podcast: Download (Duration: 48:33 — 44.6MB)
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In the episode:
01:48 – What Tier 11 is and who they work with
05:58 – Was the client an ideal prospect from the start?
11:36 – The kind of tweaking it took to become profitable
16:49 – What kind of digital advertising content converts?
19:20 – Sometimes the ridiculously simple is powerful
22:45 – The sort of production values we’re talking about
24:00 – Specific input versus Facebook figuring things out
27:18 – If the offer’s good, how important are copy and creatives?
29:57 – Did they hit any snags along the way?
33:35 – Five steps to effective customer acquisition
43:05 – Some things you’ll want to take away from this ep
Pinpoint your offer that converts with help from James
Tier 11 is a high-volume, direct response advertising agency, focusing on digital paid ads, mainly on Facebook and Instagram. Clients, whether ecommerce or digital products, come to them wanting to use interruption marketing to get new customers.
These customers all want a return on adspend. But at the end of the day, says Ralph, Facebook is not an ATM, it’s a customer acquisition machine. That’s what Ralph and his team have done for some time now, for a lot of happy customers.
In this interview, we’ll be focusing on one client in particular, for whom Tier 11 has achieved an amazing 28X result.
What Ralph liked first about this client was their mindset. They saw digital advertising as a means of client acquisition. They weren’t looking for a certain ROI for every dollar in adspend. And they understood that whoever was willing and able to pay more to acquire a customer at the end of the day really wins. They were looking to leverage the platform in order to build a business, not just sell an offer.
“He or she who is willing and able to pay more to acquire a customer at the end of the day really wins.”
And that’s what Tier 11 is about – helping build and scale and grow customers over the long term and have them be lifelong clients.
Was the client an ideal prospect from the start?
Ralph was not reserved abut working with the client, because he was familiar with them. The company is 177 Milk Street, and Christopher Kimball is their spokesperson. He’s an expert in the media space and has had a tremendous career which continues.
Chris built a company around an expertise in cooking, which he teaches, and which extends to selling things related to cooking. A great business model.
When they came to Tier 11, their monthly adspend was $13,000, and they were making about $7,000 or $8,000 in revenue. What they were doing was cycling through a lot of their warm lists, which was typical. What they wanted was to start acquiring new customers. And they understood that oftentimes you have to break even to acquire a new customer, or maybe go slightly profitable.
Looking at their data now, just in January, they’re ahead of the game. Their adspend was about $382,000, and their revenue just from those ads was $430,000.
Once a new customer is in Milk Street’s system, they have numerous recurring products, continuity products, subscriptions. So they continue to grow and scale and be big believers in Tier 11.
If the people who came in in January continue to spend and take upsells, the return on adspend will be significant. Customer acquisition cost vs lifetime value will be wholly acceptable.
Take, for instance, Milk Street’s $1 subscription. They buy that dollar subscription for about $16, $17, because they know the value of each subscriber is many times that. In their case, about five to 10X the acquisition cost. If you can take the long view on a front end offer, and if you’re selling some kind of subscription, it’s a given win.
“From Netflix through to Amazon Prime, we do love a good subscription.”
The kind of tweaking it took to become profitable
Part of the reason, Ralph thinks, that Milk Street is profitable now is Tier 11 did tweak some of their offers. The $1 subscription, for example – they had to make people aware of it and give ample reason to opt in.
Then, after 12 weeks, the full subscription would kick in – the question was, how could they compress it? Could they do four weeks, eight weeks? They consulted on that a lot, and tinkered with the offer through landing pages and different offers.
They had to figure out which products to sell. And very importantly, they showed Milk Street how to always be building a list. They used the same strategy for selling subscriptions as they did for leads. A front end, either a video or an image. Milk Street already had a lead generator, offering a certain number of tips in exchange for name and email address. It just wasn’t working as well, so Tier 11 installed lead ads.
Ralph and his team do weekly calls with the client, with a high-strategy call once a month. And they have daily communications through Slack. The back and forth dialogue gives the whole thing a partnership feel, which Ralph says is fun.
What sort of digital advertising content converts?
Tier 11 provided content ideas as well, much of it in the form of teach and pitch video ads, which, being a TV personality, Chris Kimball could easily create for them. They use a simple formula:
1. First three to six seconds – Milk Street logo.
2. Then Chris comes on. He introduces what he’s about to do, for instance put a new spin on an old recipe, like scrambled eggs.
3. He demos it in under two minutes.
4. The pitch: If you liked that, join Milk Street for $1 – you’ll get this recipe and hundreds of others. Click the link below. I can’t wait to see you on the inside.
If the offer’s good, how important are copy and creatives?
Tier 11 look to work with companies who have an offer that would almost sell itself or already is selling. Says Ralph, The big thing is the offer, really. Do you have an offer that people want? Does it have a pulse to cold traffic? I don’t care about warm traffic.
If the offer’s good, however, how important are the creatives and image and copywriting and strategy behind the campaign?
Ralph thinks the offer does the heavy lifting. An example is Milk Street’s $1 subscription – very low friction. They also sell sample packs on their ecommerce store – a variety of coffee sugars for $10 or $14. These are very good offers.
The videos Milk Street create are very high production value, but that shouldn’t get in the way. Tier 11’s teach and pitch ads, says Ralph, are done with an iPhone and a green screen backdrop – sometimes even a wrinkled bedsheet in the background.
“The offer does the heavy lifting.”
Five steps to effective customer acquisition
Ralph and his team basically used five steps to improve Milk Street’s customer acquisition.
1. When they took over the account, they installed what’s called the ecomm ad amplifier. This enables them to run $100 million a year in ads. Most ad accounts they come across are chaotic. The ecomm ad amplifier separates the account into five levels of traffic with different messaging tailored to where they are in the customer journey.
2. They refined the client’s video assets, giving them lots of consulting on what a teach and pitch video is. They did them as front end video. And running the vids naturally created retargeting audiences based on how long they watched. This worked well with the ecomm ad amplifier, which could then deliver appropriate messaging ads.
3. They cranked up the lead ads, as mentioned.
4. They tested landing pages and sales pages, using a product they call Tier 12. It’s a landing page and sales page design and copywriting team. Tier 11 deployed them in a three-month deal, and did seven iterations of Milk Street’s landing page with different testing for pricing.
“Something that a lot of people don’t test is their pricing.”
5. They scaled up the client’s store offers. The big question was, what’s your best seller? And what do you make the most money on? What’s your best deal with your supplier, and what’s your best seller? What’s the best profit margin? Which one can you afford to pay more to acquire a customer? The sample packs, for instance, did really well. And they now are also doing nakiri and chef knives, which Chris demos in videos.
Some things you’ll want to take away from this ep
Ralph’s parting advice for listeners is, If you’ve never figured out Facebook, you’re going to have to spend money to get data. Don’t expect to put a product in front of a cold traffic audience and just like that, you’re profitable. It takes a lot of analysis.
“If you’ve never figured out Facebook, you’re going to have to spend money to get data.”
And knowing, What’s your best sellers? What’s the one that has the highest margin? is important, because you’re going to probably lose money your first few months.
If you’re just starting out with Facebook ads, and you have an offer, look at all the data. Look at where the drop off points are in your funnel. Are they actually adding to cart? What are they doing there? Are they viewing content or viewing a specific product? Which ones are they viewing?
When they actually click on your ad, what’s that clickthrough rate? How much are you paying to acquire that click? How many people are actually engaging with your ad out to cold traffic? Look at it in reverse, figure out where the soft spots are, and then really refine each individual level. And chances are, if it’s not working out for you, it’s probably because your offer isn’t quite irresistible enough.
And if you can figure out a way to make a very low-friction initial transaction where you acquire a customer, where you acquire a lead, and then you sell them on the back end, that’s where the real gold is.
You don’t have to do thousands of dollars a day either. It could be $10 a day, $5 a day, but at least you’re gathering data, which Ralph thinks is the most important thing. And then, when you reach a certain level, give Tier 11 a call, and they’ll be happy to help you.
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