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iDate 2005: Customer Acquisition and Retention for Online Subscription Businesses. January 20, 2005. Scott Butler Chief Executive Officer Boehm-Ritter, Inc. What is Boehm-Ritter? Business Models Pricing and Offers Marketing Channels Optimization Launching New Channels Creative

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idate 2005 customer acquisition and retention for online subscription businesses

iDate 2005:Customer Acquisition and Retention forOnline Subscription Businesses

January 20, 2005

Scott Butler

Chief Executive Officer

Boehm-Ritter, Inc.

© Boehm-Ritter, Inc.

discussion overview
What is Boehm-Ritter?

Business Models

Pricing and Offers

Marketing Channels


Launching New Channels




Landing/Order Pages

Product Packaging

The Subscription Problem

Retention through CRM

Customer Service


“Sweat the Assets”

Discussion Overview

© Boehm-Ritter, Inc.

what is boehm ritter
What is Boehm-Ritter?
  • One of the fastest growing health and beauty businesses on the Web
  • 18 months old
  • Offices in San Francisco and Napa, CA
  • 30 employees
  • $17mm in sales (goal of $30mm in 2005)
  • Marketing spend of ~$5mm annually
  • Primary product line: Nexiderm-SP (active ingredient Matrixyl™)
  • Five new products in development for launch in Q1
  • Continuity model with Free Trial entry-point

My Background

  • CEO, Boehm-Ritter, Inc.
  • VP, Marketing,
  • Sr. Director, Marketing,
  • Director, Business Development, Alcheme
  • Marketing Manager, Nortel Networks

© Boehm-Ritter, Inc.

business models
Business Models

Two fundamental questions of online businesses:

  • Am I products and services company?
  • Am I a media company?

Answer: You are both! You are whatever the customer wants you to be when the customer has a need.


  • When a customer types in, you are a products/services company.
  • When they need a recommendation for a restaurant for a first date, a better photo for their profile, etc., you are a media company. But it’s not about banners—it’s about creating contextually relevant experiences. This doesn’t always require more money—more often it just takes smart thinking.

© Boehm-Ritter, Inc.

pricing and offers
Pricing and Offers

There are three pricing strategies that I hear over and over again:

  • “We’re going to offer a super low price point, make it up on volume, and blow away the competition.”
  • “We’re going to keep our price point very high and be the Mercedes-Benz of our industry.”
  • “We’re going to offer our product at exactly $24.95 because that’s what the leader in our industry does. Clearly they know what they are doing.”

Answer: Let the market determine your price—especially online! That’s why we are all working online, remember?

  • The answer is in the data.
  • No, you will not get in trouble (just keep your attorney in the loop).
  • There is nothing wrong with changing prices on existing customers (assuming your terms and conditions allow you to).
  • Same thing goes for offers (Free Trial, 1/3/6/12 month packages, Pay-Per-View, etc.)

© Boehm-Ritter, Inc.

marketing channels
Marketing Channels
  • Volume
    • Obviously, achieve the highest number of registrants, subscribers, customers, etc.
  • Cost per Acquisition (or Campaign Ratio)
    • Inverse relationship with volume, but with inflection points. Make sure you are tracking the customer’s lifetime sales.

Customer LifecycleImpression  Click  Visitor  Reg.  First Sale  30-Day Value  Lifetime Value

  • Diversify, Diversify, Diversify!
    • Channel (online vs. offline, search vs. e-mail, contextual vs. RON)
    • Partner (Yahoo, MSN, Google, Overture,, Azoogle)
    • Media Placement (banners, pops, e-mail, text links, etc.)

Footnote: Be careful with incentivized marketing!

© Boehm-Ritter, Inc.


Use people first…

  • Campaign Managers (people who spend their entire day in Excel and campaign reports…)
  • Tough people to find: Blend of creativity and science.
  • Start your optimization at the channel, partner, and placement level. Study after study has shown that a bigger bang for your buck is going to come here instead of at the creative level.
  • Raising CPA is easy—anyone can raise CPA. Optimization is hard.

But build/buy technology quickly…

  • Campaign tracking
  • Ad serving
  • Auto-optimization
  • Creative attribute tracking
  • Marketing/accounting tieback

© Boehm-Ritter, Inc.

launching new channels
Launching New Channels
  • Focus
    • Focus on a single channel at a time, dedicating resources creates learnings faster.
  • Shitty Phase One
    • Just get something up and get the data/learnings coming in. You can always improve upon what you have.
  • Negotiate
    • Early on, half of your efficiency should come through negotiation and half through optimization.
  • Scale
    • The moment something works, scale it as quickly as you can while keeping the ROI in line. Don’t be afraid of CPC, CPM, and CPV.
  • Growth
    • Always be pursuing the next channel, possibly separating out new channel development from existing channel management in your organization.

© Boehm-Ritter, Inc.

  • Don’t outsource this—unless you need something very, very specific. It is way too expensive and the learning curve too steep. Unless a partner will do it for free.
  • Create a solid connection between your designers and your marketing team. Designers do not just “make things look pretty”.
  • Take everything you know and throw it out the window—within reason (75% A/B testing vs. 25% “throw caution to the wind” testing).
  • Brand design vs. direct response design (0.3 seconds).

Let’s look at some examples…

  • Banners/buttons/boxes
  • E-mail
  • Landing/order pages
  • Product packaging

© Boehm-Ritter, Inc.

banners buttons boxes
Bad Example

Good Example


© Boehm-Ritter, Inc.

e mail

Holiday Copy

Customize by Partner

  • Customize creative wherever possible.

19% increase in conversion

11% increase in conversion

© Boehm-Ritter, Inc.

landing order pages
Landing/Order Pages

Direct Response

Direct Response + Brand

26% increase in conversion

© Boehm-Ritter, Inc.

product packaging
Product Packaging

Clear examples of brand design

© Boehm-Ritter, Inc.

the subscription problem
The Subscription Problem

The More Obvious Answers

  • Focus on retention (existing products)
  • Market more (existing products)

The Lesser Obvious Answers

  • Expand into new markets (new products)
  • Grow the lifetime value of your existing customer base (new products)

© Boehm-Ritter, Inc.

retention through crm
Retention through CRM

“Plugging the holes in the leaky bucket.”

  • Communicate clearly with the customer whenever you can. For example, we send e-mails not just upon order completion, but upon return receipt, refund processed, etc.
  • Communicate the clear message—and then upsell, upsell, upsell.
  • Engage the customer in your products and services (i.e. communicating with them while they are in their Free Trial is a good thing).
  • Watch retention rates very closely and create ways to measure the individual components of retention (Free Trial vs. 30 day, Partner A vs. Partner B, incentivized vs. non-incentivized, etc.)

Do Not Forget: Retention drives acquisition. Every dollar earned on the backend can be reinvested into the front of the business. We built the entire business at through annual subscriptions and renewing subscriptions.

© Boehm-Ritter, Inc.

customer service
Customer Service
  • Your customers’ phone numbers and your Customer Service center are bigger assets than you think.
  • You should see a 5-20x increase in conversion rate on the phone versus online. The numbers you are working with are smaller though.
  • Use this to make your Customer Service center a profit center, not a cost center.
  • Focus on scripting (in the same way you would focus on creative for online campaigns).
  • Collect phone number! So many companies overlook this as they don’t see value in it…
  • Start testing phone number co-registration.

Examples: Up-sell/cross-sell calls, renewal calls (counterintuitive), call transfer programs.

© Boehm-Ritter, Inc.


Cash Flow Management

  • You need razor-sharp cash flow management to find the apex between growth and risk (i.e. $10 in your checking account).
  • Get a rock star CFO.

Merchant Accounts

  • There are few “do-or-die” issues for online businesses—this is one of them (e.g. no phones, no internet access, etc.)
  • Watch chargebacks very closely (especially as your marketing changes).
  • Get backup accounts in place—even if you don’t use them—including an offshore account.
  • Keep a very close relationship with your merchant processor and the issuing banks (if possible).

Credit Card Processing

  • Watch credit card processing very closely (i.e. billing algorithms).
  • Create ways (e-mail, phone) to get expiring credit cards renewed—it is money just sitting on the table.
  • These can be the hidden gems in your business and there are people out there to help you.

© Boehm-Ritter, Inc.

sweat the assets
“Sweat the Assets”

Make sure you are squeezing “blood out of the turnip” from every resource you have in your organization, especially if you are a startup:


  • Traffic: Use exit pops! You’ve already paid for the marketing in many cases.
  • Former Customers: Make sure you are re-marketing to them (phone, e-mail, direct mail, etc.)
  • E-mail Database: Make sure you are constantly mailing your in-house database (no marketing costs!).
  • Space/Equipment: We now run our facility from 5AM to 9PM on two split shifts to keep phones, computers, scanners, etc. constantly in use. Pushing “offline” tasks to evening shifts (e-mail in Customer Service, returns processing in Shipping). Receptionist concept during peak hours in Customer Service.

© Boehm-Ritter, Inc.


© Boehm-Ritter, Inc.

contact information
Contact Information

Scott Butler

Chief Executive Officer

Boehm-Ritter, Inc.


Phone: (707) 259-1500 x205


*I will be e-mailing the presentation out following the conference. Please give me your business card if you would like a copy of the presentation e-mailed to you.

© Boehm-Ritter, Inc.

idate 2005 customer acquisition and retention for online subscription businesses21

iDate 2005:Customer Acquisition and Retention forOnline Subscription Businesses

January 20, 2005

Scott Butler

Chief Executive Officer

Boehm-Ritter, Inc.

© Boehm-Ritter, Inc.