How we scaled Perk Coffee with subscription advertising
How we overcame the common problems facing ecommerce companies trying to scale..
When we started with Paul’s business, Perk Coffee, he was struggling to break even with Facebook/Instagram ads.
His team would launch new ads for a product and they might work well for a few days, but then suddenly the cost per acquisition (CPA) would sky rocket and they’d have to turn off the ads, placing a ceiling on how far they could scale their monthly sales. We overcame this common problem with what we call Offer Stack Advertising in 3 steps.
1. Ad Content
1. Implement specific types of video & image content into your ad campaigns.
In a lot of campaigns we audit, often the video creative just isn’t good enough to drive any kind of immediate action. We implemented the following formats for immediate results in Perk’s campaigns:
Testimonial & product overlay format.
We incentivised a bunch of Perk’s customers with free coffee and filmed them sharing what they love about the brand. We combined these interviews with demonstration footage of the coffee product and these ads immediately dropped Perk’s CPA.
Product explanation video format
In these videos, we showed some detail about how the subscription works and highlighted the features and useful benefits with simple text captions, no music. Again these videos perform really well.
User generated content
Customer reviews can be used as ad copy and user generated photos/videos as the ad media to great effect. We implemented Stamped, a review app to collect a volume of reviews for ads and it also generates substantial social proof for landing pages.
2. Landing Pages
2. Launch Multiple Dedicated Offer Landing Pages
While driving traffic directly to your homepage can be a good option, we’ve found that its well worth devising specific landing pages around offers and testing the headlines and content surrounding those offers.
For example, we created clean and simple landing pages that highlight the benefits of the coffee product with and a half price first order offer. This creates urgency to buy and because the traffic is very campaign specific only to that page, it allows you to optimise Facebook for finding more buyers likely to purchase in that exact context, not diluting the pixel with other site traffic.
When it comes to a fast moving consumer goods that are under $100, it’s important to aim for first time visit purchase, and offers are a great way to get the product out to as many prospects as possible early on. We also found that offers can reach fatigue point with an audience on Facebook & Instagram, so be prepared to cycle your offers to keep them fresh and users engaged.
3. LTV and Subscription Data & Analytics
3. Accurate LTV and Subscription Data & Analytics
When you know exactly what you can spend on Facebook & Instagram for any specific offer and subscription product and remain profitable, it gives you a confidence to spend and scale your campaigns.
We determined key metrics like initial churn, long term churn, monthly recurring revenue, profit margins, to determine customer lifetime values for various offers.
As a rule, you want to keep your acquisition costs (CPA) under 1/3 of total customer lifetime value. These numbers enable you to not only focus on keeping CPA down, but on how to increase customers lifetime value by reducing churn.
We did this by introducing additional messaging to customers during their first 3 orders which reduced the number of cancellations.
We recommend the comprehensive LTV model developed by Eric Stromberg at Bedrock Capital, which calculates the initial churn and long term churn, check it out over here: https://medium.com/the-inflection-points/a-spreadsheet-for-calculating-subscription-lifetime-value-402d1a3ae7fd
How can Content Mogul help your online store?
We specialise in scaling online advertising campaigns for ecommerce businesses.
This is a balance between creating a volume of effective visual content, optimising the right pixel events, and routing paid traffic through the right sequences of pages.
If you’re a store owner who has struggled to break through to the next level of scale with your campaigns, or if you’re struggling to get ROI with your ads, then let us help you.