How To Lose 1% Of Your Customers With Just 1 Email

By Dharmesh Shah on March 28, 2011

The following is a guest post from Noah Kagan.  Noah is the Chief Sumo of AppSumo.com, a site with exclusive deals for web entrepreneurs. He previously was an early employee at Facebook and Mint.com. 
 
On the morning of March 2nd we sent out an email to 40,000 people and subsequently lost 1% of those people over the next 24 hours. 

Imagine... If we sent 100 emails then we’d be out of business. 
How did this happen?
At AppSumo.com we do daily deals on tools for web entrepreneurs. The site has been growing steadily and I wanted to automate 100% of the business so I can focus exclusively on scaling it. This led me to find a copywriter friend who is a really funny writer. The writing was not just funny but it “seemed” convincing in getting people to buy things. onstartups heart breakup

The real problem with emails coming from AppSumo was that I hate receiving emails so I always hated sending them to our customers. 

It even became surprisingly funny when customers were asking why we don’t email out about each deal. They actually wanted to hear from us!

After receiving those requests I explained how I personally HATE emails. I dread each time my inbox lights up but recognized that 60%+ of our business is driven through our email list. Our AppSumo.com emails for the most part were always short and sweet, just the way I liked them.

Open rates, clicks and conversion seemed satisfactory but I wanted to hire a real copywriter so I can focus on other things in the business. My friend Neville is a funny writer and had been extensively studying / practicing copywriting best practices. We agreed on $50 / email and he would start right away. 

The first two emails worked flawlessly. On one of them I didn't even want to email out but after reluctantly hitting the send button it surprisingly sold over $10,000 for our partner. WOw! (Note: Neville’s emails were the long-form ones you see sometimes on scammy sales pages. The ones that make you think who the heck buys this stuff but it works.)

Personally, I thought the emails were funny and different. We love our customers and try to do right every time and with every person. So we have no intention of ever selling anything we don’t personally endorse.

So I wake up March 2nd when our http://appsumo.com/gosqured-special-promo/ goes live, email sends out and my inbox starts filling up with death threats.
Here are a few: 
------------------------------------------------------------------
1- “Whatever you were taking when you wrote this, pls send me some, haha.“
2- “Noah, this time you abused your consumers trust in you. We deserve better than this bullshit.
Please take me off your list immedately.”
3- “ Your new emails suck. Too long, too low signal to noise. If you just pasted the contents of http://www.appsumo.com/gosqured-special-promo/, incl. the screenshot, it would have been 1000x better. :)”
------------------------------------------------------------------
CRAP! Then I start looking at sales and realize they are doing okay. (It was a great deal!) But I noticed the unsubscribes weren’t stopping. Usually we see < 0.5% unsubscribe rate from every email but this was one approaching our highest unsub yet. WTF is going on?

I reviewed the emails and wondered why these weren’t coming for the past 2 emails and how do I read the mix messages where people on Twitter were actually saying POSITIVE things about the email:
+--AppSumo.com Love--+
“vlaskovits: I nominate @noahkagan for best long-form sales letter ever written with today's @appsumo email. #genius”
“williamsbk: @noahkagan @appsumo I like the long email format, I know what the app does, how I can use it, the "woot" humor is nice.”
+------------------------------------------+
Talk about mixed signals! So what do you do? The email unsubscribes don’t lie. What to do in an email crisis?
Here are the things we learned and did:
  • Expectations are key. Short and sweet like my girlfriend. Our emails have always been that way. Then on a great deal we bombarded busy people with 2,000+ words which they weren’t expecting
 
  • The number of words goes up with the price. Great deals don’t need a lot of words. We shorten emails where deals are < $50 and give stories / explanations on more expensive ones.
  • Balance your priorities.  Given the conversion rate was amazing from the email I hate the fact so many people were upset with us. We are striking a balance of having links and short explanations up top while still having long-form emails.
  • Break some eggs to make an omelette. If we’d stuck with tradition we wouldn’t have learned what works and what doesn’t.
  • Be true. Make sure even if something converts better that it really is what you are happy with. We’ve improved our emails since then and haven’t heard too many complaints :)
The funniest thing about it? This email was our highest conversion to buy ever. =O
Sign up to AppSumo.com to see what our new emails look like.
  
What were some of your big, surprising lessons learned from connecting with customers with email?
Topics: marketing
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The 5 Minute Guide To Cheap Startup Advertising

By Dharmesh Shah on March 18, 2011

The following is a guest post by Rob Walling.  Rob Walling has been an entrepreneur for most of his life and is author of the book Start Small, Stay Small: A Developer's Guide to Launching a Startup.  He also authors the top 20 startup blog Software By Rob, that's read by tens of thousands of startup entrepreneurs every month and he owns the leading ASP.NET invoicing software on the market in addition to a handful of profitable web properties.

Imagine that you've just completed version 1 of your product and you're preparing for launch. You’ve greased the wheels with a few bloggers, targeted some keywords with SEO, created a bit of linkbait, and scheduled the press release to launch in the morning. At this point your co-founder turns to you and says: “What are we going to do with the $300 we have stashed away for advertising?” Consider this your lucky day. The goal of this article is to provide you with the core of what you need to know about cheap startup advertising as quickly as possible, so you can start spending that ad budget wisely. Let's get started.

Two Key Advertising Strategies

The half-life of advertising traffic is zero. This means that the moment you stop shelling out cash, the traffic stops. The problem is that with typical conversion rates of 1-2% you're paying for 98 or 99 out of every 100 people to walk away and never come back to your site. To combat this inherent wastefulness of advertising, I have two key strategies I recommend no matter which method of advertising you use.

Strategy #1: Try to Get Permission

Seriously consider offering something in exchange for a visitor's email address. It can be a free trial, a free report, or maybe even a free book. But gaining the means and permission to contact that customer again will increase your conversion rate over time in most cases. There is great power in an email list.

Strategy #2: Use Advertising to Test

Use advertising as a testing tool rather than a long-term stream of customers. Very few startups can withstand the cash outlay required to turn advertising into a marketing activity with positive ROI. Even if you figure it out, advertising is a volatile marketing medium. Prices increase rapidly in online advertising as new competition crops up or prospects grow bored of your ad and your click through rate drops. When this happens, all of the time you invested in optimizing your ad campaign is *poof*...gone. So instead of relying on ad traffic as an ongoing stream, use it for what it's best at: the ability to generate a slew of visitors very quickly, and to be turned off just as quickly. This kind of traffic source makes it great for split testing and user behavior testing using tools like Clicktale and Crazyegg. It also gives you insight into how certain traffic converts for you. With properly tracked conversions and an ad on Facebook, you can determine that men from 35-45 convert at a rate 15% lower than women of the same age. This is valuable information, especially early in your marketing effort when you're still trying to figure out the ideal market for your application. Often this is not the largest market; it's the one to whom you can market for the lowest cost. As another example, with AdWords you can learn in a hurry which keywords convert for you, and which don't. This is insanely valuable as you invest the time and money on the long-haul of search engine optimization. Knowing the keywords that really convert for your business, as opposed to the ones that you think will convert, can save you piles of cash and many months of SEO effort.

The "First Five" Advertising Options

With the above strategies in mind, let's look at the first five advertising options you should consider.

Option #1: Niche Advertising

As a startup, there are hundreds of general advertising options available, and thousands more niche opportunities. Depending on the niche you're catering to you should be able to find a forum, blog, magazine or website in which to spend some ad dollars. The tighter the niche the better. Remember that niche sites tend to be cheaper to advertise on and drive more targeted traffic, which makes a huge difference in your conversion rate. (And if you're not targeting a niche because you want your audience to be the "whole world," you're going to need a lot more than $300 in your ad budget). In general, if you are marketing to a niche you will know the sites to target. If you don't it's time to pound the pavement and find out what they are. By "pound the pavement" I mean search on Google and contact people in the niche to find out where they hang out online. Two reputable niche ad networks I've worked with in the past are:
  • InfluAds - With an increasing number of advertising "communities" covering design & UX, startups and entrepreneurs, work & productivity and web development, InfluAds can work with budgets as small as the $300-400 range. They sell a minimum set of granted impressions, and if more traffic is available during a month then existing advertisers receive it for free. Image ads only.
  • BuySellAds - Though they've traditionally focused on the design & UX space, BuySellAds is in the process of branching into many other niches. This image-only ad network was the primary source of traffic for a design-oriented website I owned, and made the difference between a few hundred dollars a month in sales, and a few thousand. Advertising is purchased by impression or on a monthly basis from individual advertisers, meaning each offers different pricing. But the minimum buy is very cheap - in the $10-$20/month range.

Option #2: Google AdWords

  • Ad Format: Text or image
  • Ad Components (for text ads): 25-character deadline, 2 lines of body copy @ 35 characters each, 35-character display URL
  • Approval Process: Automated, with manual review if you trip a filter

A few years ago, Google AdWords was great for startups. Many niches were untouched, and 5 and 10 cent clicks were commonplace. But these days, the vast majority of niches worth pursuing have ever-escalating click prices as more advertising dollars move online, including dollars from large corporations that don't blink an eye about spending $5 to produce a single visitor to their website. With a 1% conversion rate you need a $500 lifetime customer value to break even. This is more than a stretch for most startups who are scraping by on 0.5% conversion rates and sub-$100 lifetime customer values (at least to start with). But with Google carpet-bombing $75 AdWords coupons to every business in the civilized world, the number of advertisers, and thus the competition, is increasing. For the most part, the days of cheap clicks are over. The $1-2 per click I used to pay to advertise my invoicing software has become a negative ROI for me at $4-5 per click. But all is not lost. There is still a place in the backwoods of AdWords where the wild-west mentality (and cheap clicks) reign. That place is the content network. People traditionally think of Google AdWords as the ads that appear to the right of the search results. But the lesser known cousin of search ads are the ads that appear in every AdSense block you see around the web. These are ads placed through the Google AdWords content network. The content network is less targeted, higher volume, and typically much cheaper to advertise on, than the search results. While we don't have time here to delve into specifics of how to place ads on the content network, the most consistent approach I've seen that works over the long-term is to use their cost-per-action tool called the Conversion Optimizer. There's a great write-up of how it works from Patrick McKenzie of Bingo Card Creator fame, here. There are also some helpful tips on advertising on the content network here. And if you're willing to drop a few bucks, by far the best AdWords book available is the Ultimate Guide to Google AdWords, which includes a section on using the content network.

Option #3: Facebook

  • Ad Format: Text with required image
  • Ad Components: 110x80 image, 25 character headline, 135 characters of body copy
  • Approval Process: Manual (sometimes slow)

Facebook is still viable for startups with its ability to deliver 10-15 cent clicks under the right circumstances. But it's a bit like the Wild West: if you approach Facebook advertising incorrectly you will pay a premium, around 75-90 cents per click. The value of Facebook is its ability to show your ads to exactly who you want to see it based on information in a user's profile. You can easily segment on gender, age, location, relationship status and a number of other fixed parameters, along with thousands of interests and occupations you can target using keywords. The key to low cost Facebook clicks is having a high click through rate (CTR). The key to a high CTR is a combination of a powerful image, an engaging headline, and laser-focused targeting. Due to space constraints we're not going to cover the basics of choosing a powerful image or writing an engaging headline. Not when there are perfectly good articles already written on the subject for those who would like to know more: choosing an imagewriting a headline. But once your ad is written, there is a trick to achieving those 10 cent clicks. Based on a tip from my friend JD, I now use the following method with Facebook ads:
  1. Target your demographic information so tightly that you can write a headline that addresses them specifically. Example: if you are selling shoes online to the U.S. market, create 10 different versions of the ad, one for each of the major metro areas in the U.S. Also include the qualifying "interests" keyword: shoes. Now make each ad headline address its group specifically, using a formula like "Need Shoes in [city name]?"
  2. Start the ads with a modest budget of, say, $5-10 per ad per day.
  3. After 12-24 hours review the ads. Some will have high CTRs and costs per click around 10-15 cents. Others will have low CTRs and clicks in the 80-90 cent range.
  4. Pause the higher cost ads and increase the budget for the low cost ads to whatever you can afford; $100 per day or more per ad.
  5. For a few days you will receive extremely low-cost, targeted traffic. But since you've chosen a small group of people, they will start to tune out the ad rather quickly. At this point your CTR will drop and your cost will climb. Pause the ad, and start over with new cities, new images or new headlines.
This approach requires ongoing maintenance but if you can generate targeted, 10-cent clicks it's worth the effort.

Option #4: StumbleUpon

  • Ad Format: not applicable
  • Ad Components: just your URL
  • Approval Process: Manual
I recently advertised my developer's guide to launching a startup on StumbleUpon. The plus side of StumbleUpon is that all clicks are 5 cents. The downside is the bounce rate is high since people are basically channel surfing. I achieved a 96.88% bounce rate in my experiment, with an average stay of 2 seconds. I wonder if it was something I said? In my test, only 25 visitors stayed longer than 5 seconds. I paid $50 for 1000 clicks, but since only 25 of them stayed long enough to read anything, I effectively paid $2 per click. Your mileage may vary, but through this and other experiments I've gathered the following tips for advertising on StumbleUpon:
  • Your #1 goal is to get stumblers to stay longer than 5 seconds. Your #2 goal is to get them to up-vote your page. Paying $50 for 1000 clicks is one thing. Having it go viral and receiving 10,000 clicks for the same price is another.
  • Don't send StumbleUpon traffic to a landing page that asks for an email address. StumbleUpon users are notoriously fickle about providing their email.
  • People stumble to be entertained, so if your page doesn't have the potential to go viral or turn into linkbait, you will not likely fare well.
  • Blog-like content and videos seem to work best. Anything that resembles a traditional landing page will bomb.

Option #5: Reddit

  • Ad Format: Text with optional image
  • Ad Components: 70x70 image, title, URL
  • Approval Process: Manual (two-day lead time)
Reddit uses an interesting approach for their ad pricing: advertisers bid a certain amount per day, all of the money goes into one big pot, and each advertiser receives their share of the impressions based on the percetage of funds they contributed. It's a simple system, but it means there's a bit of uncertainty about what you're going to get for your money. However, Reddit has the potential to provide some very cheap clicks - I've seen as low as 3 cents - if you play your card right. Similar to StumbleUpon, Reddit provides your ad with the potential to go viral. Gabriel Weinberg has a great write-up of the 20,700 clicks he scored for 3.14 cents each for his new search engine Duck Duck Go. His eye-catching image and tech-focused startup served him well with the audience. As he says:
First, a search engine ad is a good fit for reddit ads in general. It has broad market appeal and redditters in general like trying out new technology. Second, I think the ad is particularly well structured. The circular duck icon draws your attention, is contrasting to site colors, and sticks out because it is a circle (as most images are square). I believe the title also has appeal.
Gyutae Park also has a nice write-up of the 434 clicks he purchased for 9 cents each here. One of my recent experiments was a bit more pricey: 187 clicks at 40 cents each. My lackluster performance was a combination of landing on a competitive advertising day, and using a poor-quality header image. In retrospect, I have no idea what I was thinking using this unreadable image: Reddit ads are so simple (just two visible components) that the only tip I have is self-evident: your image has to rock, and so does your title. It's all about choosing an image and headline that makes people click.

Conclusion

To conclude, I want to reiterate what I said early in this article: unless you have deep pockets think of advertising not as a long-term traffic strategy, but as a testing tool to improve your website and find out more about your ideal visitor. Few bootstrapped startups can withstand the cash outlay required to turn advertising into a marketing activity with a positive ROI, but that shouldn't keep you from testing the waters to find out for yourself. I look forward to hearing about your advertising experience and recommendations in the comments.
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