Early Stage Startup’s Acquisition Dilemma:
A common question among early stage founders is trying to figure out whether to optimize their existing acquisition channel or to find a new one, and a common answer they often receive is “it depends.”
If you are in this situation, and still haven’t figured out what to do, here are three frameworks that’ll help you navigate through the dilemma:
1. Maximize advertising inventory
Advertising inventory is the amount of ad space that is available to be sold to the advertiser, the square centimeters of ad spaces in a magazine or newspaper.
In the internet world, this refers to the amount of traffic an acquisition channel can offer, in terms of AdWords and SEO, this translates to the maximum clicks you can generate through search results.
If you are already ranking high for keywords that you care about, then there really isn’t much to optimize, you’ll likely face diminishing returns for your future efforts with a maximized inventory. But if you are only ranked 4th or 5th, and if optimizing this inventory will likely grant you 2X the traffic, then it’s worth optimizing.
Once you have maximized an acquisition channel’s inventory, it is time to find a new channel or campaign that can generate 2X the business.
2. New channel vs optimization
When a new acquisition channel launches and fails, it is often due to failing to understand how to operate the channel or it is simply a bad channel for the business, and it usually can't be fixed with optimization alone.
Handing out flyers won’t work for certain startups, and for these startups, optimizing the content on the flyer won’t lead to drastic improvement in acquisition. One signup with a “10% improvement” is still one sign up. So it is important to have the business fit the channel, and test to see if the channel is how customers find their solution to their problem.
Lastly, when it comes to early stage startups, most of the data are not going to be statistically significant, so the variations in results are simply random, thus making optimization very difficult. To avoid this common trap, look for big changes in results, these changes are the important changes that provide learnings and progress.
3. What to optimize and what to try?
There are two factors to take into consideration, time and money. If time is the abundance resource, then channels like content marketing, SEO, e-mail, referral and partnerships are more suitable to try. If money is the abundance resource, then paid marketing channels are better to experiment with.
In terms of optimization, after maximizing the best performing channel, early stage startups should focus on optimizing their website and landing page because every campaign will eventually lead there.
A 10% increase on bounce-rate equates to 10% more revenue across all of your campaigns. It could be that the testimonials are not strong enough, the value proposition is unclear, or that the pricing page is confusing. There are plenty of optimizations that can be made on the website to produce substantial results, especially for early stage startups.
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