Getting marketing budget approvals is tough, while expectations for growth keep increasing. According to December 2016 E-Marketer study, the biggest goals for digital marketers were to increase revenue, leads and traffic, while the biggest obstacle was to secure enough budget to achieve the goals.
One of the reasons behind the difficulty to get budget approval is ROI. CEOs demand higher accountability and have expectations for proving the ROI of marketing budgets.
In fact, 93% of CMOs say that they are under more pressure to deliver measurable ROI. This of course, trickles down to the SVP of Paid Media, then to the VP of Business Development, and finally to the Director of Marketing.
Despite the promising stats, you still need to prove that Facebook Ads works for your E-Commerce business. Otherwise, getting approval for a substantial budget will be tough.
So, the question is how do you maximize the ROI for Facebook Ads channel when you don’t have a big budget?
Start Customer-Centric Campaigns and Reinvest
When you have a limited Facebook Ads budget, focus on selling to your loyal customers first.
You will maximize the customer lifetime value first, which will help you build a strong case for reinvestment in customer acquisition on Facebook.
To do this effectively, your campaigns have to give your customers what they want, before they know what they want.
I call them Customer-Centric Campaigns.
Here is proof that customer-centric campaigns work.
Our team at SCUBE used customer centricity to achieve 4,660% ROI on Facebook Ads for an E-Commerce education company.
4,660% ROI. Can’t beat that.
In addition, the client started receiving comments like this from their customers:
Most importantly, Customer-Centric Campaigns helped us build a case for reinvestment of our Facebook Ads budget into new customer acquisition campaigns.
Let’s explore Customer-Centric Campaigns in more detail. They involve two components: Customer Centricity and Facebook Custom Audiences.
Your customers is why your company is in business in the first place.
In Teradata’s recent survey on data-driven marketing, 90 percent of marketers said that customer individualization is a priority, and that’s because they’re learning that the more personal the approach, the greater the chance of a positive response.
This leads to the second component.
Facebook Custom Audiences
Facebook Custom Audiences allow you to reach your customer segments (more on them later) and deliver a highly personalized message in a way that makes them feel like the advertising is relevant and helpful.
Before we dive in, let’s clarify the conversation with a couple definitions.
Facebook defines a Custom Audience as “an ad targeting option that lets you find people who already know your business on Facebook.”
There are four types of custom audiences based on the touchpoint source with your business:
- Engagement on Facebook
In this article, I am talking only about Custom Audience from Customer File.
Facebook defines a “Custom Audience from a customer list as a type of audience you can create made up of your existing customers.”
In reality, customer list is broader because it refers not only to customers, but to first-party contacts, which can be leads and newsletter subscribers.
3 Steps to Launch Customer-Centric Campaigns
Step #1. Create Customer Segments
Every E-Commerce company has customer data. Data can tell a lot about your customer base.
Every customer is different, but when you segment your database into specific customer segments, you start seeing similarities between each segment. There are many ways to segment your customers, here are few segmentation models to start with:
Best of all, you will start getting a deeper understanding of each segment and launch more personalized Facebook Ads for that audience versus casting a general message for everyone.
Segmentation is a strong contributing factor for better campaign ROI. Aaron Orendorff of Shopify Plus agrees:
Direct Marketing Association attributes 77% of ROI to segmented, targeted, and triggered campaigns.
The email marketing industry has found huge value from segmentation for years. In fact, Lyris has reported that 24% of marketers who segmented their email lists experienced greater revenue, 24% increased sales leads, and 21% experienced greater customer retention.
The Lyris Annual Email Optimizer Report
Here is how customer segments and Facebook Ads fit together.
Create Customer Segments
Analyze your customer database around common data points (more examples later) and create segments.
For example, in the client case study mentioned earlier, customer segmentation revealed how often the client’s customers repurchase their products and when when they re-start the buying process for their product. This helped us to create customer segments based on the client’s customer behavior:
- The product they bought
- When they bought it
- When they will be buying it again
On top of that you better understand the behavior and the ROI of each segment.
Create Custom Audiences
After the segments are created, you have to upload them to Facebook. You can upload emails, phone numbers or Facebook UID from each segment.
Facebook will match them against its user base and return you an audience ready to use for targeting advertising containing only the people in that list. Match rates vary, but expect about a 50% rate. For example, Wordstream got a 48.99% match rate on their customer list.
To create your customer segments, start with the following 4 data points. You probably have them, so make sure to use them.
Data Point #1. Purchase Date
The most basic data you collect with each purchase is the purchase date. However, the value is in the context that will be used for Facebook Custom Audiences. With purchase date you can:
Understand how often your customers buy your products.
Understand the seasonality of your products.
Predict when your customers may need additional products.
Data Point #2. Product Type
The second data point you likely have in your company is the product type. It comes with your transaction data. Segmenting your customers by product type gives you a better understanding about:
The additional product groups your customers may need (upsell/cross-sell opportunity)
The timing for the need to repurchase your products
Data Point #3. Purchase Value
Purchase value data point is great because it helps you segment your customer base by value to your business.
For example, “one of the primary ways marketers can increase sales with Custom Audiences is to re-engage with existing, high-value customers,” suggests Dan Morris, Director of Product Marketing at Marin Software.
To segment it even further, break down your customers into 3 groups by purchase value. You will quickly see how your database is divided and understand the price consciousness of each segment:
Top 20%. Buying the best
Bottom 20%. Buying the cheapest
Mid 60%. Everyone else
Once your segments are ready, you will start developing ways to engage each segment.
Data Point #4. Newsletter Segments
Newsletter segments can become a hot topic if you have a discussion with an email marketing manager, who’s trying to protect his/her turf. They might argue,
Fair enough. Let’s look at the stats.
The average email open rate in E-Commerce industry is 16.75%. That means on average 83.25% of your sent emails are not read.
That raises the question back to the email marketing manager:
What's the value of a non-read email? To me it's 0. Case closed.
Let’s get back to business.
If you have a strong email marketing team, you will likely have advanced segments available for your newsletter.
However, if segmentation is a new topic, I recommend to start with 3 segments prepared by the GetResponse team:
Frequent respondents. “Find out exactly who opened your email, followed a CTA, clicked a link, and visited your website for further interaction. These are your ‘respondents’ as we call them”.
Newbies. “We recommend that you segment recent subscribers. They are brand new to your list and need to get used to your communication cycle and style. On top of that, you won’t have enough information to apply any other targeting criteria.”
Sleepyheads. “You’ll notice that certain subscribers never respond. There may be hundreds of reasons. Inactive email addresses should be placed in their own segment, so you can try to reactivate them or ask them to re-subscribe.”
Step #2. Perform Customer Research
At this point you have customer segments. The next step is customer research.
Remember, to give your customers what they want before they know what they want it, you have to know what they want and communicate it in their words.
Start with the Voice of Customer (VOC), which Gerry Katz of Applied Marketing Science Inc. defines as “the study of customer needs” through qualitative and quantitative research. VOC covers four areas: customer needs, a hierarchy, priorities, and segmentation.
You will be able to understand:
Customer motivations when buying your products
Why customers bought your products at certain times
How often your customers buy your products
The next step is to state what customers want in their own words. John Hauser, the author of one of the 25 most influential articles in the field of Marketing Science by the Journal of Marketing Science agrees:
Your customer research will fuel your offers and messaging for each customer segment when developing Facebook Ads campaigns.
So how do you find out what your customers want? I recommend 4 tools to start. Begin with what you have and only then perform additional research.
Method #1. Customer Review Sites
Customer review sites like Feefo and TrustPilot resonate well with E-Commerce companies because they help to improve customer trust and sales. Reevoo reports an average 18% uplift in sales from customer reviews.
There are few other areas where customer review sites add value:
- Customer demand. Your customers don’t trust you and want to verify you are legit. Graham Charlton from E-Consultancy agrees “61% of customers read online reviews before making a purchase decision, and they are now essential for e-commerce sites.”
- Better click-through-rates. You expect to improve click-through-rates on paid search campaigns, resulting in more traffic at a lower cost per click.
- Customer research (what we care about right now). Find out what the customers care about in their own words.
Here is how we analyze customer feedback on review sites:
- Group feedback into two groups: positive (5 and 4 stars) and negative (1 and 2 stars). Both will give you a perspective from both sides. Ignore the short feedback such as great, because it doesn’t give you any context.
- Dive deep into qualitative feedback and highlight the words customers mention (See the example below of how we did this for a client).
- Group customer feedback into recurring themes.
Method #2. Live Chat and Help Desk Logs
You are likely using some sort of customer service software (Live Chat or Help Desk) to solve customer problems. It can be a goldmine of information for customer research. This is direct feedback at critical points within the relationship with your customer that can be used for customer research.
Customer research is similar to using customer feedback on review sites.
- Begin with the two opposite sides of feedback: extremely positive and extremely negative.
- Dive deep into qualitative feedback and highlight the words customers mention.
- Group everything into recurring themes. Jacond Firuta, Content Manager at LiveChat states that “you should monitor what kind of cases appear on these channels. If many customers report a particular problem often, it’s a warning that it may be a potential pain point.”
Method #3. Customer Survey
Let me start with the quote from the Google Analytics man himself Avinash Kaushik:
Survey Monkey, Typeform or Google Forms probably come to mind. Any other tool your E-Commerce business has used is fine. As long as you have data from your customer surveys.
If you haven’t surveyed them, do it this week. Start with actionable customer feedback. Jennifer Havice, website copywriter, recommends 4 questions for pulling out voice of customer:
- “When did you realize you needed a product/service like ours?”
- “What problem does our product/service lessen or fix for you?”
- “Did you consider any alternatives to buying/working from/with us?”
- “What concerns or hesitations did you have before you decided to buy/work with us?”
Once you have the feedback,
- Dive deep into the words of your customers and highlight the important
- Then group everything into common themes.
See an example below of how we analyzed customer survey responses:
Method #4. On-Page Surveys
You may be using on-page surveys for conversion rate optimization. These tools offer non-intrusive surveys for your website’s visitors that will pop up at the bottom of the page, so you can collect customer feedback when they are taking action on your site.
Most notable tools are Qualaroo, Hotjar Incoming Feedback, and VWO On-Page Surveys. Here is how Hotjar Incoming Feedback looks:
These surveys are a goldmine for insights. Make sure to collect enough data so you can get meaningful insights. As Peep Laja of ConversionXL suggests:
Once you collect the data, the analysis is no different than analyzing customer feedback above. That is:
- Dive deep into qualitative feedback.
- Highlight common frustrations and positive traits customers mention.
- Group them into larger themes.
Step #3. Build Customer-Centric Campaigns on Facebook
Before we launch, let’s stop for a moment and recap where we are:
- You segmented your customer base and have audiences ready in Facebook for each audience.
- You developed a better understanding of your customer segments by doing a customer research.
Now it’s time for the final step:
Build customer-centric campaigns.
That means developing offers, ads, and landing pages that speak directly to each segment. Here’s how everything looks:
A few tips for connecting the dots:
1. Context & Intent. The main data point that represents the segment, which will help to develop a hypothesis for intent.
a) For example, a customer segment that purchased your product in the past 12 months and is eligible for an upgraded version.
b) Another example, a segment of the top 20% of customers by the amount spent with your business. They have a higher affinity to purchase additional products and represent upsell and cross-sell opportunities.
2. Gap & Opportunity. Where you can add value based on the context and intent. Map your offer to each segment. Let’s take the Top 20% segment as an example. You have many options to engage this customer segment. Few ideas to start:
a) Product usage campaigns
b) Customer appreciation campaigns
c) Exclusive deals for top customers
3. Messaging. Incorporate the positive and address the negative feedback in your ads and landing page.
If you are new to Facebook Ads, use these beginner guides for technical details on setting up new campaigns:
- The Beginner's Guide to Facebook Advertising by AdEspresso
- How to Create Facebook Ads: A Step-by-Step Guide to Advertising on Facebook by Carly Stec of Hubspot
- Facebook Advertising Made Simple: A Step-by-Step Guide by Neil Patel
Here is how other companies incorporated Customer-Centric Campaigns into Facebook Ads.
Example #1: Purchase Date Segment
To encourage new game ticket sales, Orlando Magic used purchase date to create Custom Audiences for fans who had purchased tickets to previous games. This campaign resulted in 52 times ROI.
Here is what Traci Mistarz, Director of Digital Strategy, Orlando Magic said about the approach:
Example #2: Newsletter Segment
The Museum of Science in Boston ran Facebook campaigns to promote their museum memberships. They segmented their newsletter list into a few categories such as subscribers to the Museum’s monthly email update, previous gift membership buyers, current and lapsed members. Their campaign resulted in 3 times ROI.
Example #3: Product Type Segment
The San Jose Sharks used the product type data point successfully to drive 33 times ROI for their Facebook Ads campaign. They created a previous season ticket customer segment, which was used to upsell SharkPak ticket packages (11 and 21 games).
That’s it. Now you have a process to win with Facebook Ads and can prove to your leadership that this channel works for your E-Commerce business.
Customer-Centric Campaigns will help you maximize the ROI with the existing budget. This is because you will maximize your customer lifetime value by giving your customers what they want before they know what they want it using segmentation, customer research and personalized messaging.
The early success will give you momentum and a clear case to add more budget to the Facebook Ads channel.
Share your success stories with Customer-Centric Campaigns in the comments below.