HubSpot Kipp Bodnar’s Real Yak about Customer Acquisition Cost
Paid acquisition makes up 10-15% of overall marketing acquisition that happens in a given month. The close rate for paid leads is far lower than it is from organic leads. In fact, organic leads close at 4X the rate that paid leads close. Of course, paid leads are still necessary when you want to kick start your traffic. So what’s the best strategy for your business?
Kipp Bodnar, VP of Marketing at HubSpot, drilled down into the real value of paid acquisition at the CMO Summit last week by helping everyone think about conversions in comparison to everything to which you’re actually putting your dollars.
At scale, your company will find greater acquisition momentum through organic leads, as opposed to paid. So increasing marketing headcount can be much more worthwhile than investing in paid acquisition. “We can spend 10% more of Facebook next month, and get 10% more leads,” Bodnar says, but then what happens when you grow and your target market shifts or expands? You have to change those targeted filters on your Facebook campaign, and all of a sudden your Customer Acquisition Cost increases 2X for a return that might not be nearly as high.
So what are some common pitfalls of paid acquisition for early stage companies? “We wasted a lot of time A/B testing things that didn’t matter,” Bodnar accounts on his early days. Oftentimes, companies put resources into testing acquisition strategies that would not even yield a notable ROI if pursued as effectively as possible. For instance, a company with a meek newsletter database could A/B test incentive-based email campaigns, but why bother if a 50% conversion means only a handful of people will simply click through to the website.
As Bodnar says, “If you had a magic wand, and everything you’re about to do is going to go perfectly,” says Bodnar, “Is it still actually worth doing?”