We recently launched our new Podcast “Traction”. Check it out here.
One of my recent interviews was with Ken Chen, the co-founder and CMO at Naturebox. The company is doing great and Ken is a very strong performance marketer. There were a couple interesting tidbits that I learned from our conversation that is particularly relevant to early stage companies, and I thought I’d try to crystallize a few learnings on my blog as a companion to the podcast. The link to this specific episode is here.
Learning #1 was how to think about non-performance channels. I think it’s always a tricky question at the early stage how much to invest in stuff like PR, social, influencer marketing, etc. Ken talked about how Naturebox invested pretty heavily in influencer marketing and other brand channels. The way he thinks about it is that these tactics help your marketing dollars “work harder”. The idea is that if it costs you X to acquire a customer through a paid channel, it might cost you some fraction of X if a) the customer has already heard about you through some sort of brand, social, or influencer channel before or b) are able to Google you and easily get some positive social proof. I thought it was a very simple way to think about the value of these efforts. I often see founders either discount brand and PR entirely because it’s not measurable, or focus too much on these without enough analytical rigor. I thought this was a very simple way to think about this.
Learning #2 was the importance of experimenting with new channels. Building a company is always easier when the wind is at your back, and one of the biggest ways to propel the growth of a company is to take advantage of emerging new ways to reach consumers. Naturebox has done a very good job of this – they have been pretty early and aggressive advertisers on podcasts, for example before many other companies caught on. At their current scale, they need pretty big emerging channels to move the needle for them. But for a small startup, you can be much more creative because scale matters less. This is also why, as Ken says, the marketers who are experienced often struggle with early stage companies if they are wed too much to an old/existing playbook built off older channels. Great early-stage marketers are experimenters and competitive about uncovering opportunities that others miss.
Learning #3 was around making good decisions with incomplete data. Two tidbits. The first is that you can get a good sense of the productivity of a channel with just a few days of data. You don’t need to max out for a month to know what the rough theoretical max would be for a channel. The second is that you also don’t need to get many many months of customer data to get a good feel for LTV. You get a very good feel for customer retention curves in the first 3-4 months. Relatively speaking, what is more likely to have a big impact on the value of a cohort is a major shift in the way a channel works or the acquisition economics, not an unforseen change in how customers stick with you several months out.
There will be tons more really interesting learnings in the episodes to come. I’m really enjoying the process of creating these, and am learning a ton. Hopefully it’s helpful for founders and early stage operators as well. Again, you can subscribe here via iTunes, SoundCloud, or Stitcher