McKinsey & Company recently released an updated report that takes a look at customer acquisition. Check it out here. The biggest takeaway is that email, while not nearly as sexy as social platforms, is still an incredibly solid channel. How solid? Forty times (40x) more effective than Facebook and Twitter combined.
Even if that is bound to change over time, let that sink in for a few seconds.
Email also seems to be three times (3x) more likely to prompt a purchase, and the average value of these purchases is estimated to be seventeen percent (17%) higher than purchases driven through social media channels. (If you have questions about the methodology or the shelf-life of the data, talk to Nora Aufreiter, Julien Boudet or Vivian Weng.)
It is also worth mentioning that organic search should be a priority focus when it comes to customer acquisition efforts.
Before you infer from that data that the business viability of social networks (even Facebook and Twitter) has been grossly oversold, keep in mind that what we are talking about here is customer acquisition, not customer development and customer retention.
Think about the customer journey as a three-phase lifecycle:
- Customer Acquisition
- Customer Development
- Customer Retention
Too many companies make the dual mistake of a) focusing too much on acquisition and not enough on development and retention, and b) using social media channels to acquire customers rather than develop and retain them (further compounding the problem).
Note that, on average, customer acquisition costs are six times (6x) higher than retention costs… so right off the bat, it makes very little sense for companies to spend time and money filling their customer bucket without really focusing on patching up the hole that keeps it from ever being full. Using the wrong tools (channels) doesn’t help a whole lot either.
So today’s insight (partly courtesy of McKinsey’s data) is as follows:
Focus the lion’s share of your customer acquisition efforts on traditional marketing channels, SEO and email. Focus your social channel activity on customer development and customer retention. At some point, doing this will organically begin to increase the effectiveness of social networks in regards to customer acquisition, but that’s a little further down the road for most companies still struggling to understand and operationalize what we just covered here today.
I hope this was helpful.
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