How I Would Increase Customer Growth and LTV for CrateJoy through Paid Traffic

CrateJoy Current Situation.

Here is what we currently know:

• CrateJoy has a target $CAC cost in mind that appears to be feasible
• There has been better success targeting certain collections with landing pages related to that vertical
• There is a need to increase the LTV of the customers purchasing from the subscsription marketplace.

Plan of attack

Let’s tackle each of these main issues and see what we can do to improve upon these metrics.

CrateJoy’s $CAC

So far we know that certain collections give different types of LTVs. With the limited data that I have, I would assume that while each merchant has their own LTV due to the different subscription services they have, we could break down merchants either into collections or subcollections to get a LTV that is either a mean or median of that overall group.

Based on that group, we can then see what type of $CAC cost makes sense. Having a blanket customer acquisition cost across the board only makes sense if the LTV doesn’t vary as much across industries.

Once those stats are sorted out, we can make a decision as to whether or not we should stick with a CAC for CrateJoy customers in general or choose a CAC based on category or subcategory.

Targeting Collections

This strategy makes the most sense to focus on. While lookalike audiences work great, we should test adding other layers.

In acquisition, there are different conversion rates based on a customer’s familiarity with a product. The more they see your brand, which in this case is the marketplace, the more likely they’ll be to buy. For the sake of simplicity let’s breakdown people coming to the site into two traffic types:

• Cold Traffic
• Warm Traffic

Cold Traffic

Cold Traffic consists of the people that have never heard of CrateJoy. This will usually have a higher CAC then other types of traffic.

Approach to Cold Traffic

We can still employ lookalike audiences based on collections. However I would add an extra level of layering with interests. Interests, however,  should be more specific. Magazines, TV Shows, Brands, Conventions & Fairs & Public Figures are just a few layers we can test separately on top of the lookalike audiences.

I would also split test different types of bidding. Two popular campaign types for direct response in Facebook are conversion campaigns and click campaigns. However, those same campaigns can be bid on by clicks or conversions vs clicks or impressions respectively.

They can be bid automatically or manually. If there already exists a substantial amount of conversion data, I would start with optimizing for conversions. However it would be smart to experiment with other types of bidding as a side test if it hasn’t been done.

Warm Traffic

Warm Traffic is made up of people that have already visited your website. According to SimilarWeb.com, Cratejoy already has 1.6 M visitors a month. Even if it’s off by 50%, that’s a good amount of visitors.

Without the data it’s hard to know how many of those visitors are in the marketplace, but assuming  that the Facebook pixels are properly placed, and there are at least 200,000 visitors per month, that’s a good amount to work with.

Retargeting

This is where it gets fun. We start to segment our audiences based on their likelihood of purchasing a subscription box through our marketplace. The monthly traffic that the site is getting should be enough to get started with. These are bottom of the funnel customers and should be the cheapest to acquire. Even within retargeting, we can start segmenting the traffic

Add to Cart – Didn’t Purchase

We can retarget people that took this action based on recency. Starting from 3 days out to 7 days. Usually, the less days, the more likely it is to convert. If each subscription box has a sku in the marketplace, we can create a feed and create dynamic remarketing where Facebook will automatically show an ad of the subscription product a client just added.

We can also test this with a discount offer to see how much the conversion rate improves and whether or not it is still profitable.

Viewed Subscription Box but didn’t Add to Cart

We can retarget the same subscription box for the first 3 to 5 days. After that we could retarget that person with the subcategory page instead in case the person didn’t want to purchase that particular subscription box.

Viewed Category/Subcategory

We can use carousel ads to promote each subcategory if they visit a category page and stop there. If a person visits a subcategory but doesn’t go into a box, we can use the ads to promote the top selling subscription boxes in that subcategory. This last ad can also be done by using dynamic product sets, so as long as our product catalog feed is built correctly, the ads will show the best selling subscription boxes.

Viewed Marketplace but didn’t get to Category

The same here in the sense of using carousel ads to promote the categories. The key thing here is to move the customer into the next step of the funnel.

Signed Up to List

When someone signs up the marketplace I’m assuming that they are taking to some type of confirmation page. Assuming they decide not to click further on the pages, we can send them to categories. Once they’re in that bucket they’ll automatically be moved into the next remarketing bucket.

Retargeting should be where the budget should be focused initially. Once these things are highly optimized and or can’t spend anymore, that’s when we can focus on experimenting with the cold traffic until we find what works, and then that can be scaled.

Increasing LTV

I’m not sure what the LTV of a subscription box is, but here are some calculations that I did regarding CAC and LTV. I used the Beer & Wine category because, well, wine is awesome.

Looking at that subcategory page, here were the subscription boxes I found and their monthly prices:

Subscription Boxes	Lowest Monthly Fee (USD)
Beer Streets	$22.00
Vinebox	$35.00
Uncorked Box	$30.00
Boomtown Box	$22.99
Crafty Nectar	$35.65
Sunrocks	$19.99
BrewShips	$12.99
BearSauce Box	$19.95
Can Pants	$6.00
Cooler Can Monthly	$7.00
First Sip Brew Box	$24.99
Orchard Box	$36.26

 

We come up with an average of $22.45 per subscription. This is assuming the lowest fee.

According to your site, the average churn rate is 8% across all of your lines. That comes out to customers staying for 12 months, raising revenues to $272.82 USD per customer.

Assuming the average US sales tax rate of 8.48 % and $7 shipping/month, we’re looking at a total of $379.96 per customer.

With the marketplace fee of 10%, CrateJoy makes about $38 per subscription in the long run in that particular subcategory. If this is the LTV of the customer, our CAC has to be much lower than that to remain profitable.

Churn rate is something that we can’t control directly. Sure we can make the software better and continue to instruct the merchants on how to better retain clients, but that’s up to another department.

The main thing I see where I can help is increase the average subscription per customer. That’s where we can increase LTV and allow for more flexibility with CAC.

Using the Purchase Pixel, we can easily retarget complimentary subscriptions. I’m assuming the company has data that supports that. If not we’ll suggest best sellers in the same category through carrousel ads.

We can also upsell other best sellers once someone buys the first subscription. Someone that buys ‘Winebox’, we can say something to the extent of  “Thank you for your purchase, have you seen these other boxes?”

We can work on the wording afterwards, but that’s just a short example.

In the first purchase email or the thank you page, we can test that messaging vs. sharing with friends vs having both messages. It’s important to have the customer continue to buy while they’re in buying mode.

If the data shows differently, we aren’t obliged or restricted to cross selling within the category. Maybe people that like wine boxes like beauty boxes. The opportunities are endless.

Another idea could be to turn CrateJoy customers into CrateJoy merchants. We know that some customers will be gone after 12 months.

Why don’t we start targeting them in the 11th month on how to start their own CrateJoy business?

We’ll have the customer emails. We’d just have to download that data and run ads to those particular email addresses based on how close the customers are to dropping off.

I’m sure there are other ideas I can come up with, but I think this post encapsulate’s the main ones.

My name is Rafael Moreta and I’ve been doing direct response onlinemarketing since 2010. I come from an affiliate background but I transitioned to working with businesses and services. My two strongest veriticals are lead gen and ecommerce. I’ve worked with many traffic sources but the two I have the most experience with are Facebook Ads and Adwords.

Here is a link to my LinkedIn Profile : https://www.linkedin.com/in/localppcpro

Hopefully these ideas have given you insight into what and how I can help out CrateJoy.