Half Million Dollar Mistake?

Using Data to avoid costly mistakes

Testing is a critical part of a companies growth, testing new sales strategies, testing landing pages and web flows, testing marketing strategies, testing pricing structures.  From testing comes innovation and growth and can put your company on a new trajectory!  This is even more important in start-up companies looking to scale and reach new heights for investment and brand recognition.

While all companies test new ideas and want to innovate from that testing, often times it can lead to costly mistakes if you don’t set the proper data processes in place to measure the success or failure of a test.  One such mistake cost a start-up company nearly half a million dollars in marketing spend that was ineffective.

The Scenario

A company was working on launching new marketing strategies, changing content, changing channel mix, updating keywords everything a typical high growth start-up focuses on when trying to grow 5-10X.  As they launched new strategies and expanded their channels they spent more money, grew their customer base, spent money, etc.  They decided they needed to spend on Facebook advertising(Note: This is not an evaluation of Facebook advertising) to get a new channel and reach one of their previously modeled target segments.

The Problem

Early Stage companies are always growing fast, pivoting quickly, and adjusting strategy to keep the wind in their sails.  This company shifted their sails to Facebook advertising and spent significant amounts over a 3 month period, around $500K on campaigns.  When they picked their head up to determine how well that half million did, they saw that they had around 15-20 customers attributed to that spend. $25,000 CAC!?  That’s unacceptable in any business!

The Mistake

This company made a mistake that many others make every day, and it’s not that they chose to use Facebook as a marketing channel, in fact Facebook can be very effective in many situations.  Their mistake was in their data tracking and reporting process to oversee their decision to spend on Facebook.  The company made the decision to spend, but then didn’t have a process in place to monitor the effectiveness of that spend and didn’t review it’s effectiveness until months had passed and damage was already done.

The Solution

This mistake could have been avoided very easily.  Dollars would have still been lost, but the bleeding could have been stopped more quickly.  To prevent this, the company needed reporting and access to data in place, with clear goals and objectives.  Facebook actually makes it very easy to ingest spend data, campaign information, store it on an ongoing basis and report out to leadership.  This company should have built out this process before spending $500,000 on this channel.  The data from Facebook alone would have been helpful, but the coupling of this data with customer registrations and LTV would have made it an easy task to set goals, and monitor the effectiveness of this channel.  They could have learned more quickly and operated like most start-ups and “failed fast”.

The NuView team works with countless companies to analyze marketing effectiveness, both current and historical marketing spend.  The keys to success are understanding data available on your channels, setting clear goals, and consistently reporting for key stakeholders to make decisions.  With the data process in place, the marketing leaders can do what they do best, creating great content, shifting strategy, and growing a company!