Growth Newsletter #049
This newsletter curates growth insights from the Demand Curve Slack community. It keeps you up-to-date on growth tactics.
This week we're covering time-to-value, Facebook video ads, cart abandonment, and cold emails.
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This week's Insights
Reduce time-to-value to increase conversion
Insight from Kieran Flanagan.
Time-to-value measures how long it takes for new users to experience value from your product.
You want this to be as short as possible.
- Airbnb's time-to-value is one click: search a location for rentals.
- SimilarWeb's time-to-value is one click: analyze any website or app.
Both companies' time-to-value is immediate, free, and doesn't require setting up an account.
- Loom: The user you send a video to gets immediate value. They can watch the video without needing to sign up.
- Miro: The user you send the board to gets immediate value. They can instantly start collaborating with you without needing to sign up.
- Calendly: The user you send your calendar link to gets immediate value. They can see available times and book time with you without needing to sign up.
So, if your model allows, see if you can shorten your users' time-to-value through your product.
You can also take this a step further. Unlock value incrementally by creating two different product experiences:
- First time-to-value: New users get instant value by accomplishing the first step in their customer journey (this is the experience described in the examples above—finding a rental, analyzing their website). Give users access to a useful portion of the full product, but not the whole thing. Prompt them to create an account to get access to the rest.
- True time-to-value: Once they sign-up, present users with a second wave of value by presenting features that previously were locked. Help them continue their customer journey by picking up from where they previously left off in the first experience. For Airbnb, that means seeing the availability of rentals they discovered. For SimilarWeb, that means viewing the full report and comparing to competition.
By including two separate, valuable experiences, you'll likely turn more browsers into paying users.
Find out if your Facebook video ads actually hook users
Insight from Demand Curve.
A shorthand tactic for quickly assessing the performance of your Facebook/Instagram video ads: measure "thumb stop rate." This is a measure of how often people stop scrolling through their feed to pay attention to your ad.
- A high thumb stop rate indicates that your video’s intro grabs users' attention.
- A low one (less than 10%) means you need a better hook.
The thumb stop rate isn’t a default metric in Facebook’s Ads Manager. You’ll need to create a custom metric and add it to your ad dashboard.
- Go to your Ads Reporting page.
- Click Customize to open the Customize Pivot Table sidebar.
- Select the Metrics tab.
- Click the Create button.
- Fill out the custom metric creation form using the formula: 3-Second Video Plays / Impressions.
Add this metric to the Ads Manager view you look at each day. Consider creating new hooks (or entirely new videos) for any ads with weak openings. This is the first touch point to folks watching the rest of the ad.
Wait one to three days to retarget after cart abandonment
Insight from Ariyh.
Ecommerce cart abandonment has skyrocketed. Retargeting helps, and it's even more effective if you time it right.
Pre-pandemic, ecommerce shoppers abandoned their carts about 70-80% of the time. For some industries, that number rose to nearly 95% with the onset of Covid.
One theory: Our online shopping style now more closely resembles our pre-pandemic window-shopping habits. We look, we make a mental note, we move on.
You won’t recover all those lost sales, but you can get many of them back through retargeting messages (email, SMS, app notifications) or ads that remind shoppers about the products waiting for them.
Don’t retarget right away, though. Test waiting one to three days.
Sooner than that, and you might be marketing to shoppers who simply haven't proceeded to purchase yet but intend to. Longer than that, and there’s a good chance they’ll forget about their interest in your product.
When you do retarget, consider using scarcity or urgency to drive the purchase.
Example: Say you normally run a simple retargeting ad for a product a shopper added to their cart. Try adding messaging to your ad indicating how many other people bought the product today. Or, if true, indicate that you're running out of stock, and they should act quickly to get one.
Grow through cold emails
Here's an excerpt from the Growth Program's Cold Email module.
Why you should consider testing cold email as a growth channel
No one likes getting cold emails.
But when it’s done correctly, it works. Some businesses single-handedly grow through cold email.
Take a look at this email (we wrote it as an example):
This is cold email perfection:
- Clearly indicate why you’re reaching out and how you’ll add value—and be specific: “Customer IO will increase revenue by ~12%.”
- Proactively handle key objections.
- Add a personal touch up front, which acts as the hook for the rest of the note.
- End with one clear CTA. And since it’s the first email, ask for interest instead of time in your CTA. “Do you think we’re a fit?” works better than “Let’s book a call” at first.
- Include “persona-matching”—the presumed sender of the email isn’t a salesperson. It’s the employee who most closely matches the role of the intended recipient. This builds trust and can lead to better cold email ROI.
We’ll teach you how to send effective cold email campaigns like these.
What makes email so great?
- Targeting: Emails let you target exactly the people you want, and when done right, they’re so personalized that people can’t help but respond. You can’t get that with ads. Why? Ads cast a wider net, meaning you’ll always end up hitting people who will never buy from you. A 2% CTR would be impressive with ads. For email? You can see CTRs as high as 50% on strong campaigns.
- Access: Most decision makers still manage their own email inboxes. This is a massive opportunity. So long as you have the correct email address, your message lands in front of decision makers as they’re actively making business decisions.
- Low capital investment: All you need is an email account, and potentially software to help you automate your process. So it makes sense to start with this channel if it has potential for you. That way you’re not burning cash before you’re generating revenue from clients.
Who should use cold outreach
Most early-stage startups should test cold outreach, but it’s most profitable for B2B companies.
Cold outreach isn’t “free”—that’s a common misconception. Due to the labor involved in outreach and sales, CACs can be relatively high. In many cases, only high margin products can support cold outreach as a growth channel.
B2B companies typically have a higher margin than consumer companies.
Think of it like this:
Say you run an online shoe company where you sell $100 pairs of shoes that cost you $25 to make. Cold outreach might not be worth your time: You’ll likely spend hours sending emails, setting up calls, and managing the funnel. Labor hours would exceed your $75 margin.
But for a B2B SaaS business selling $1,000/month contracts? 5 labor hours to close a deal might result in thousands of dollars of profit.
That doesn’t mean you should rule out cold outreach if you’re not at a B2B company with high margins.
You can still make cold outreach work. Here’s a framework for identifying companies that cold outreach could work for:
- High margin products that can afford the labor of emailing and closing.
- Products that are expensive and that people aren’t actively searching for (if people are searching for your product, search ads and content might be more effective).
- Most early-stage startups that need a low capital investment way to sell and generate revenue so that they can afford to test other channels—like running ads or hiring a content writer.
Specific examples of companies that should test cold outreach:
- Agencies who charge $2000+/month per client and collect their first payment after the first month.
- Most B2B SaaS companies.
- Companies selling expensive physical goods (like equipment or medical devices).
- Edtech companies that sell high-margin digital products.
If you’re deciding whether or not you should test cold outreach, here’s an actionable framework. Test cold outreach if you meet one or both of the following criteria:
- Your profit margins are greater than $500 per closed deal AND your payback period is less than 2 months.
- You’re at an early-stage startup that sells products over $100 and you can afford to sell at low margins to get off the ground—do things that don’t scale until you can afford to test channels that scale.
Creating a cold email strategy
Here’s what a cold outreach pipeline could look like:
- Generate a prospect list.
- Invite the qualified prospects (via email) to an online product demo, sales call, or webinar.
- Address their objections and entice them to purchase.
- Negotiate and close their contract.
We’ll show you how to test cold outreach as a growth channel. That means standardizing your approach and running tests to see if you can acquire customers profitably through cold outreach.
To get the rest of our cold email module, you can buy the Growth Program here. Here's what else you'll be able to do with the program:
- Design your growth strategy: Your dedicated growth advisor will help you focus on what matters, so you can ignore what doesn't.
- Build your funnel: Redesign your landing pages, marketing emails, onboarding flow, and referral programs to significantly increase conversion.
- Launch and scale acquisition channels: Go deep on the inner-workings of every major customer acquisition channel—ads, content, referrals, and everything else. See our examples of what good work looks like.
If you're not ready to buy, you can get a free course of the sample here.
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See you next week.
— Nick, Grace, Joyce, Dennis, and the DC team.