Customer acquisition is oftentimes the key cost for a startup, and hence one of the most important capabilities for a startup to build and a key skillset for a startup to hire for. One reason for that is that Google, while a great tool in many ways for helping companies with customer acquisition, can really make customer acquisition hard to do.
Why? Well, the importance of Google to the internet means its algorithm and policy changes have HUGE impacts on customer acquisition costs and strategies.
Case in point: a little over two years ago, content businesses — like Demand Media which had learned to profit on the difference between the cost of acquiring customers from search engines and the advertisement money they could make on their content — woke up to a sudden shock when Google algorithm changes drastically changed their cost of acquiring web traffic. While this was a conscious effort by Google to improve its search results for its users, the result was like a natural disaster: an unanticipated and massive change in the business environment. Investors dinged Demand Media’s stock price by 50%, Yahoo shuttered its Associated Content business and replaced it with Yahoo Voices, and many of the initial big losers from Google’s algorithm updates continue to lag in search rankings.
Just a few months ago, Google again shook the customer acquisition world by introducing a new tabbed interface in their Gmail web email client. While tabbed interfaces have been around forever, what made Gmail’s special was that these tabs also served to filter email messages so that Facebook/Twitter updates, forum posts, and – drumroll – promotional emails/coupons weren’t the first thing a user sees when they open up their mail. The result? All those brilliant subject lines and email marketing campaigns that you’ve come up with? There’s a really big chance they got shunted to a tab that the user is predisposed to ignore or skim with impunity. The result? Companies who rely on email as a customer acquisition channel have to find ways to counteract this — getting users to (1) open up their “Promotions” tab and (2) designate to Gmail that they want those particular promotions to hit the main inbox – or shift to a new way of getting customers to act.
This type of thing is typical in the customer acquisition world: to succeed, you need to not only get really good at today’s modalities of acquiring customers, you also have to be adaptable – and roll with the sudden changes that Google or Facebook or one of any sudden shifts in the digital world can do.
Update at 11AM PST, 8 Oct 2013: As if on cue for my blog post, I received an email from eCommerce jewelry vendor Blue Nile today about moving their promotions into my main email tab 🙂