How to Calculate & Maintain a Healthy Customer Acquisition Cost (CAC)

“You have to spend money to make money.” This seemingly good-natured advice has spelled doom for millions of businesses worldwide.  While it’s true that businesses occasionally need to spend more upfront to validate their idea, doing so with a complete disregard for unit economics can be fatal. That’s why Customer Acquisition Cost (CAC) is such […]

The post How to Calculate & Maintain a Healthy Customer Acquisition Cost (CAC) appeared first on CXL.

“You have to spend money to make money.”

This seemingly good-natured advice has spelled doom for millions of businesses worldwide. 

While it’s true that businesses occasionally need to spend more upfront to validate their idea, doing so with a complete disregard for unit economics can be fatal.

That’s why Customer Acquisition Cost (CAC) is such a critical metric. It’s the single most important indicator to prevent reckless spending. In this post, we’ll show you how to calculate CAC, plus share a few tips to help you maintain it at a healthy level. 

How to calculate CAC

CAC can be calculated with the following formula: 

Total Spend on Acquiring Customers / No. of Customers Acquired

But “Total spend on acquiring customers” can be ambiguous. In most cases, it includes:

  • Salaries of sales and marketing teams
  • Advertising spend on acquiring new customers (Search/Display Ads, Social Ads, Sponsorship, etc.)
  • Cost of software/hardware used in sales and marketing
  • Agency, PR, or any third-party costs involved in sales and marketing

The sum total of these costs divided by the number of new customers gives you CAC. Here’s how this could look for Company A over a 3 month period: 

Table showing examples of CAC over a three month period

In March, for example, CAC is: 

$48000/1100 = $44

But what if your product offers a free trial and your data team tells you it takes 30 days on average for “free trial users” to become paid customers. That would mean the 1100 new customers in March are the result of February’s acquisition cost. 

Therefore, you need to attribute revenue by their monthly cohorts rather than when they converted in order to properly measure ROAS.

This calculation will get more complex for free trials of other durations, such as 14 days. Here, ROAS would be partially influenced by the acquisition cost of both the existing and previous month:

CAC for March (14 day free trial) = [(48000 + 33000)/2]/1100 = $37.

And what if your product is freemium (i.e. users can use your app for as long as they want until they feel the need to upgrade)?

The freemium version influences acquisition of new users. Some businesses even include a portion of freemium development costs (such as server maintenance) in their CAC. However, many leave it out for the sake of simplicity. 

Freemium users also have a much longer conversion funnel or “penny gap” compared to free trial users. 

For example, Mailchimp’s freemium plan gives you basic features with 2,000 subscribers and 12,000 emails per month. As it might take a while to cross that threshold, you need accurate data to learn when each customer was first engaged. This will help you attribute the conversion to the correct acquisition cost.

Another common problem is how to calculate returning users. A popular way is to include the cost of re-engagement campaigns in the acquisition cost. This way, you won’t have to segment new customers.

But for more accurate data, calculate CAC separately for new and returning users. Re-engaging is often cheaper than acquiring new users and clubbing the two acquisition costs together might give a rosier view of your CAC.

The key takeaway? Understand whether a cost directly influences new (and returning) customers. If so, include it in your acquisition costs. 

But CAC only tells you how much it costs your business to acquire one purchase. Lifetime value (LTV) gives you a more accurate understanding of your CAC efforts.

LTV/CAC – Understanding the golden metric

Often touted as the north star for businesses, LTV/CAC is the single most important metric to gauge business health.

Lifetime value refers to the total amount a customer is expected to bring in during their stay with your business. Here’s how you calculate LTV:

[ARPC (Average Revenue Per Customer in a Month) X Gross Margin] / MRR Churn Rate

CAC tells you how much a new customer costs. LTV explains how much a customer is worth. That’s why the LTV/CAC ratio provides a holistic view of your business. 

For example, say CAC of Company A increased from $30 to $40 in one year. Whether this should worry stakeholders would depend on the change in the lifetime value during the same period. If the lifetime value increased by more than 33%, the overall LTV/CAC ratio would increase, which is a great sign for the business. Therefore, an increase in CAC isn’t always bad news.

According to most experts, the LTV/CAC ratio should be at least 3 for a sustainable business (i.e., a new customer should bring at least 3X value of what they cost to acquire). 

LTV/CAC of less than 3 is a red flag as it indicates you’re overspending on acquisition. It’s a sign that you need to review CAC of your prominent channels and look at the growth marketing funnel to understand where the fault lines are. 

The opposite is also true: three or higher means you can afford to spend more aggressively to acquire new customers. 

Note that LTV/CAC ratios can fluctuate month on month due to specific investments. So, you should look at overall trends rather than isolated instances. 

For example, on-demand graphic design service Manypixels ran a 40% discount at the beginning of the year on its subscriptions:

Email discount offer from Manypixels

This would directly impact the lifetime value of users signing up in the discount period by reducing the Average Revenue per Customer. But that shouldn’t be a cause of concern because discount periods are expected to impact revenue-related KPIs.

Using CAC to make key strategic growth decisions

Let’s come back to CAC and explore how it can help you make key strategic growth decisions. 

Segmenting CAC to prioritize channels

CAC is only one metric, but you can use it to understand how your message resonates with different customer segments and which customer segments get the most value from your product or service. This helps you justify marketing spend and discover new markets. 

For example, let’s say your CAC is $100 and LTV is $250, giving an LTV/CAC ratio of 2.5. 

While this is less than 3, it still doesn’t give the full picture. Suppose your product is selling in multiple countries. In that case, you should calculate CAC separately for all of the markets you’re in. 

Maybe in certain markets, CAC is low while LTV is high, giving a higher LTV/CAC ratio. By simply shifting spend across different markets, you might be able to bring overall LTV/CAC over 3. 

Similarly, you can also calculate CAC for different marketing channels such as Search Ads, Social, Content Marketing, etc. This will help you understand which channels are giving better returns and help with overall budgeting. 

Note that to segment CAC, you need to have flawless tracking. You should be able to attribute the customer to specific marketing channels, even if there is a delay in conversion. 

Involve your data team in the process of channel attribution and creating conversion pixels. This would ensure that tracking in your centralized dashboards aligns with the data in different marketing tools. 

Fixing the Leaks

Growth marketing is a funnel. From the first ad impression to the final conversion, there are several steps along the way. Consider the following funnel for a Google Ad campaign: 

Table showing data from Google Ads campaign

You spent $1,000 on a campaign that yielded 5 customers with a CAC of $200. There is leakage at each stage of the funnel. However, reducing leakage at any stage will have a direct impact on CAC. That’s why you should keep track of conversion rates across the entire funnel. 

Here, the sign-up and click-through rate is 10%. This is mostly dependent on your landing page. If by optimizing your landing page you can bring this rate to 12%, that alone will bring your CAC to $167 if all other conversion rates remain the same. 

Suppose the above Google Ad is to acquire users for a to-do list app. Here, the free trial/sign-up rate would depend on the initial onboarding that explains how to use the app. By making the onboarding more intuitive, you can improve the conversion rate, leading to a direct reduction in CAC. 

There are several tools available to help you optimize your growth marketing funnel. For example, HubSpot Academy wanted to increase its sign-up rate. They used a simple exit-intent survey widget from Hotjar to ask visitors why they were about to leave the page: 

Example pop-up form from Hotjar

Visitors gave answers such as: “I don’t know how this will help me with my career?” or “I cannot make an account. The form keeps asking me about a company name while I’m a jobseeker.”

By making adjustments in their landing page based on the feedback, they were able to increase conversions by 10%, leading to a direct impact on the CAC. 

Many organizations struggle to bring down CAC because these steps involved in the funnel are disjointed, lacking oversight of the entire process. That’s why marketers are often encouraged to visualize their projects in the form of a funnel. This helps them better understand the impact of their projects on the bottom line. 

Where does the payback period fit in?

No discussion of CAC and LTV is complete without bringing up the payback period. 

Although investors bet on the future, they can’t ignore the present health of the business. Knowing how long it takes a business to recover CAC gives them a great indication of its investment potential. That’s what makes the payback period a favorite KPI of the VCs. 

Payback period is the number of months it takes to recover CAC from a customer:

CAC / Average Annual Revenue per Customer 

In subscription-based businesses, it generally takes a few months to recover CAC. Most experts recommend it takes less than 12 months, i.e., your business should be able to recover CAC within a year. This is a good rule of thumb, but it varies considerably depending on your industry. 

This is a big reason why most subscription-based businesses offer heavy discounts on annual plans. By encouraging people to purchase for a year and pay beforehand, they can significantly lower their payback period:

Example of a pricing page from Taskworld

Note how Taskworld’s pricing page encourages visitors to subscribe to their annual plan. 

A note on churn

Churn is another factor that affects the LTV/CAC ratio. No matter how good your CAC is, profitability may stagnate or suffer if customers don’t stick around.

Churn refers to the number of customers or percentage of revenue that your business loses at regular intervals. Most businesses track it on a monthly basis for both customers (Customer Churn Rate) and monthly recurring revenue (MRR Churn Rate). 

It’s important to be aware of which churn you’re using in your LTV calculation, as they might give different answers. You’ll find examples of using both customer and MRR churn rates. We suggest using MRR, especially for products with flexible pricing. Here’s why:

Suppose you have 100 customers that contribute $5000 in MRR each month and one of them is a big enterprise that constitutes almost $250 of your total MRR. Now, losing that customer might show 1% customer churn, but the MRR churn would be 5%, which is a much more accurate reflection of the intensity of loss.  

Monthly churn figures might seem trivial, but a 5% customer churn every month will make you lose almost half of your customers by the end of the year, courtesy compounding. 

So, what is an acceptable churn rate? Unfortunately this simple question doesn’t have an easy answer. Countless studies have tried to estimate the average churn rates. For example, a study of 1500 SaaS products by Recurly revealed an average monthly churn rate of 5.6%: 

Recruly benchmark report on churn

Above, we see an industry-wise monthly churn benchmark based on Recurly’s study. Note that B2C organizations tend to have higher churn than B2B businesses. 

However, it can be tricky to assume that just because your churn rate is less than a “benchmark”, you’re in the green. A business with high growth might be able to survive a higher churn rate. 

Churn rates can also vary depending on the nature of your product or even the market. For example, if you sell a product in America and Japan, churn in Japan may be traditionally lower because there are fewer Japanese language alternatives to your product. 

Therefore, the best way to measure churn is against your own metrics. If your churn is showing a downward trend, that’s great news for all your SaaS metrics. 

Conclusion

Measuring CAC opens the door to several other key SaaS KPIs. That’s what makes it such a vital metric to track. 

SaaS products are always on the move—tapping into new markets, tweaking pricing, and exploring unique pricing plans. It’s highly unlikely that the way you define CAC will remain the same. Even with your existing pricing structure, there might be several approaches to calculating your CAC, depending on who you ask. 

Although CAC is included in various KPIs that affect marketing performance, it’s not a marketing exclusive metric. Every team should keep an eye on CAC and understand how their work affects it. By making CAC a common thread in strategic conversations, you can nurture a shared interest across different departments and prevent silos.

The post How to Calculate & Maintain a Healthy Customer Acquisition Cost (CAC) appeared first on CXL.

10 Product Announcement Email Examples (and What you can Learn from Them)

Research shows that for every $1 you spend on email marketing, you can expect an average return of $42. Compare that to paid advertising where the average ROI is $2 for every $1 spent.  You can see why email is such a crucial part of an effective product launch strategy.  Email is profitable because it […]

The post 10 Product Announcement Email Examples (and What you can Learn from Them) appeared first on CXL.

Research shows that for every $1 you spend on email marketing, you can expect an average return of $42. Compare that to paid advertising where the average ROI is $2 for every $1 spent. 

You can see why email is such a crucial part of an effective product launch strategy

Email is profitable because it allows you to talk directly to your audience. You don’t have to rely on ever-changing algorithms and hope your message reaches the intended segment. Email gives you a direct, unobstructed means of communication, thus a bigger return.

In this article, we’ll cover what’s needed to grab attention in a stacked inbox. Then, we’ll break down 10 successful product announcement emails, looking at why they work and what you can learn from them.   

Winning the fight for inbox attention

Whether it’s a new product launch, product update, or upcoming event invitation, the aim of a product announcement email is always the same. It should:

  1. Get the word out to as many people in your target audience as possible
  2. Educate customers on features, benefits, and availability
  3. Convince customers to take action

To achieve any of these things, you need to get your email seen. This means winning the battle for inbox attention. With around 320 billion emails sent and received every day, this is no easy feat.

That sheer volume means a product launch email can’t be a one-and-done effort. A single correspondence is too likely to get lost in the shuffle.

To reach, engage and convince your target audience, your best bet is to approach launches as an email campaign. Craft a series of emails that grab attention whether the recipient is an excited fan or only vaguely familiar with your brand.

Creating a product announcement email sequence

With any email sequence, timing is as important as the messaging. For a product announcement, you want to build anticipation ahead of launch and follow up after. 

Your email sequence should look something like this:

1. Teaser email: A heads up that something new is coming soon. You can hint at what it is, but don’t go into too much detail. You only want to build hype and excitement. Scientists have found that anticipation can be even more rewarding than the experience itself, so make sure to utilize it to build interest. Aim to send out your teaser email up to two weeks before launch. 

2. Product announcement email: Tell your audience about the product they’ve been looking forward to. Fill them in on key details (what it is, how it benefits them, launch date, etc). Use images and videos where necessary to show off your product and ramp up the excitement. 

3. Product launch email: Let your audience know that the product is live. Reiterate features and benefits while you’ve got their full attention. 

4. Follow-up email: After the initial excitement has died down and sales have slowed, follow up to remind your audience of your new product and what’s great about it. Send your follow-up email a week after launch. Make sure that your email list is segmented so that only subscribers who haven’t yet made a purchase receive it. 

Crafting a product launch email sequence gives you several opportunities to engage subscribers. Those that open your first teaser email can go on a journey with you from announcement to launch.

Those that only see one email in the sequence should be intrigued to learn more or ready to make an informed decision. Every email in the sequence, no matter the order, should focus on these outcomes. 

Work under the assumption that this is your only opportunity to grab attention. This means crafting a catchy product launch email subject line. 

Writing an email subject line that stands out

There is no magic formula for this. And no subject line you try will work every time. But there are principles you can follow. 

Shanelle Mullin goes deep on what these are in her post on improving open rates

Here are the core principles to keep in mind…

1. Continuously test your subject lines and measure your success by open rate.

2. Research your audience’s voice through surveys and interviews.

3. Use tasteful personalization meaningfully, but test it to prove that it works for your audience.

4. Choose clarity over being trendy or clever. If you’re considering an empty suitcase or curiosity gap, think about the expectations you set with your audience upon opt-in.

5. Be aware of mobile subject line character restrictions.

6. Choose every word carefully. In subject lines, a single word can make a big difference.

7. Segment your email list to uncover deeper insights about what’s working and what’s not.

8. Treat preview text and from name as an extension of your subject line. 

This email from Grammarly stood out in my inbox thanks to its use of the siren emoji and attractive offer: 

Grammarly subject line

Nike’s subject line also caught my eye: 

Nike subject line

It turned out the shoes weren’t my new favorites. But the subject line certainly made me want to find out. In that sense, it did its job perfectly. 

“The headline is the ‘ticket on the meat.’ Use it to flag down readers who are prospects for the kind of product you are advertising.” – David Ogilvy

Let’s look at some different subject lines used by brands to get attention. And, dig into how they craft their emails to engage users and drive click-throughs.

10 examples of brands that nail product announcement emails

We’re not sharing product launch email templates. As soon as they’re out in the world they immediately become unoriginal. Instead, take inspiration from the launch email examples below to craft your own unique campaigns

1. Digit

Subject line: Big (very big) news

Online bank Digit’s announcement of “Big news” in its email subject line is intriguing. But it’s the addition of “(very big)” that helps it stand out. 

It’s a small touch, but it fits in with Digit’s quirky and conversational tone of voice. It also gives extra weight to the announcement.

The eye-catching subject line is supported by a strong header (representing the unique selling proposition (USP): “A bank account you can brag about.” This is followed by an image of its mobile app and prominent CTA button placement, making it easy to see how the app works and join the waitlist. 

The body copy is concise, just five short sentences. But it tells readers about the product and how it benefits them: it saves and invests “so you don’t have to.” If financial planning isn’t your thing, this is very compelling. They then include another CTA button, giving readers multiple chances to sign up. 

Subscribers that grabbed the opportunity to join the waitlist became part of a product launch email campaign: 

Digit’s follow-up email features your spot in the line and how many people have joined the waitlist. Social proof 101: make people feel they are part of a shared experience so they feel more confident about their choices. 

The email also includes referral links to engage members, giving them the chance to share the campaign to move up the list. 

Finally, readers are driven to educational content about the new product. This works to convince members who are on the waiting list but unsure about fully committing. It also details why the product is important, giving readers more reason to want to jump the queue. 

What you can learn from this email

CTA positioning is important 

Your CTA placement should be strategically tied to your objectives. If you want users to commit to something, use more than one CTA.

Placing a CTA above the fold means that recipients will see it on whatever device they’re using. This acts as an instruction to readers to take the desired action. 

The second CTA is used to nurture the lead if they’re not quite ready to commit. Digit places this one at the bottom of the email, giving readers the chance to learn more before taking action.

If you want users to take action, always go with a CTA button and clear instructions. Campaign Monitor found that using a button-based CTA increased its click-through rate by 28% over a link-based CTA

Keep customers engaged

If a subscriber has joined a waiting list for your product, don’t let that be the last they hear of you before launch.

Digit’s confirmation email does a great job of keeping members interested by gamifying its list.

Everyone wants to be the first person to get their hands on a shiny new product. Giving them the chance to move up the list keeps customers excited while giving Digit greater exposure.

Look at ways to keep excitement levels high so that your subscribers look forward to launch day.

2. Kajabi

Subject line: Get a competitive edge with Kajabi

Kajabi’s subject line gives readers a reason to click by promising them something. “A competitive edge” is important to Kajabi’s audience of entrepreneurs, marketers, and influencers. 

Clicking through, readers are met with a strong headline: “Actionable insights from a #1 Podcaster”. This instantly tells us that the insights are worth taking notice of. 

The copy tells readers about the podcast and what we’ll learn from listening, with a CTA link to the podcast and a CTA button to Kajabi’s podcast tool.

Its use of CTAs is clever. By making the podcasting tool CTA a button, Kajabi subtly prioritizes its primary offer. 

Those that are interested in the podcast will find their way to the podcast link. But the eye is naturally drawn to the blue button, which drives traffic to its sales landing page.

What you can learn from this email

Use influencers to give your emails gravitas

Kajabi highlights in bold that its podcast guest is “Alex Ferrari, author, blogger, speaker, consultant, and host of the Indie Film House Podcast (the #1 filmmaking podcast on iTunes).” 

This adds authority. Even if you don’t know Alex, it’s clear he’s a big deal in film and podcasting. You want to hear what he has to say. And not only that, he’s a Kajabi user. 

If a number one podcaster trusts Kajabi, it has to be good, right?

Think about how you can use influencers or prominent customers to convince users to take action. Even if the name doesn’t ring a bell with your audience, listing their credentials can give your product credibility.  

3. Havenly

Subject line: Something new is coming to Havenly

Havenly product launch email

Havenly’s teaser email is a great example of how to build intrigue around a product launch. 

The headline (with the help of a large blinking eye GIF) instructs readers to be on the lookout for further announcements. And the copy assures them that what’s coming will be worth the wait.

“Next week, we’re launching something new, that we know you’ll love. 

“That’s all we can say for now…”

It is clean, simple, and makes you want to find out more. 

The lack of a call to action is also a clever touch as it requires you to either sit tight or proactively visit the Havenly website.

What you can learn from this email

Sometimes, less is more

When it comes to building anticipation, provide just enough details or a sneak peek to keep readers thinking of the possibilities.

Forgo CTA buttons and eliminate any distractions in email design so that the readers are left wanting more. 

Havenly’s email builds anticipation with the promise that they’ll love what’s coming. This growing curiosity should drive action in follow-up emails.

4. Apple

Subject line: AirPods Pro are here.

Apple is a master of the product launch. It’s why so many people tune into its live events and queue around the block when the latest iPhone hits shelves. 

Its new product announcement email for the AirPods Pro uses strong imagery and powerful copy to sell the product. 

A black background helps the product images and blue CTAs stand out to draw readers in. It also lets the visuals do a lot of the heavy lifting, with only short copy needed to highlight new features. 

Information is also clearly displayed, including the price and details of how to experience AirPods Pro in-store. This level of clarity is important when a product is in high demand.      

What you can learn from this email

Benefits over features

Announcement emails aim to drive action, so you should lead with benefits over features. That’s because people buy on emotion and justify it with logic—and benefits tap into emotions.

Rather than tell customers the AirPods Pro has a 519 mAh battery, Apple talks about them delivering “More than 24 hours listening time.”

From a dry fact, Apple has delivered a reason for people to buy the product. 

To translate features into benefits, ask yourself: “so what?”. Here’s an example from Enchanted Marketing:

The oven preheats quickly.

So what?

It’s quickly ready to start cooking your lasagna.

So what?

Your food is on the table sooner.

So what?

Life is less stressful. There’s less hanging around the kitchen waiting for the oven to get ready. And you don’t have to worry you might forget to preheat your oven.”  

Consider your readers’ intentions

Not all of your customers will be ready to buy the first or even the fourth time they read your product announcement emails, especially if you’re selling a high-ticket item.

To remove a barrier to purchase, provide supporting information that helps with decision-making. 

Apple includes several CTAs in its email that point users at the AirPods landing page. There, they can find out more and compare models. It also provides a link to a store finder for its audience to try out AirPods in person. 

This supplemental information works to nurture readers who aren’t ready to commit to buying. For those who are, the “Buy” button next to the price remains the most visible CTA on the page.

Everyone is catered to. 

5. Farewill

Subject line: Farewill Launches Telephone Service

Farewill’s brand is defined by its conversational tone and use of illustrations to make their product (which is serious in nature) a bit less intense. 

“​​The simpler way to deal with death” is their landing page’s USP, which sits on a bright yellow background and showcases cartoon-like figures smiling on a couch. 

This vibe carries through to its product launch announcement email. 

What this email gets right is the clarity of its message. In three paragraphs, readers learn the problem and are presented the solution. It’s clear and to the point, but written with just the right amount of sincerity.

The copy is capped off by a well-spaced CTA button that’s free from distractions. And, a little further down the page, a testimonial that adds social proof. 

What you can learn from this email

Write in short sentences and short paragraphs 

Each paragraph of Farewill’s email is a single sentence, well-spaced across no more than four lines. This is important as it makes the words easy to digest. 

People don’t read on screens the same way that they do in print. White space is important for helping us take in what we’re reading, especially on mobile devices. 

A study by D.Y.M Lin shows that “proper use of white-space between lines of paragraphs and its left and right margins can increase comprehension up to 20%.”

Split any paragraph of more than three lines. This will ensure that even if the reader skims, they’ll be able to find the information they need and you’ll be able to get your key points across. 

6. Willo

Subject line: Your exclusive invite | Willo is live in 24hrs

Electric toothbrush brand Willo builds the intrigue for its product announcement from the subject line.

Extending an “exclusive invite” makes customers feel like they’ve been chosen to receive this email and are part of a select few. 

The simple headline (“The countdown has started…”) combined with a bold product image of Willo grabs attention and makes readers want to find out more. 

When the reader scrolls down, they find out why they’ve been chosen, along with the key information and a code they need to purchase on launch day.

Finally, there’s a video that introduces the product and covers the benefits for those who need a little more convincing. 

What you can learn from this email

Use scarcity to convince and convert

By giving recipients exclusive early access to one of only 1,000 units, Willo effectively uses the scarcity principle: the rarer the opportunity or product, the more valuable it is.

“When something is rare, it’s alluring–true whether you’re talking about precious gemstones or a pristine edition of the first issue of Action Comics (which introduced Superman). And psychologists have long known that if you can make a consumer good more desirable by making it appear rare.” [via Science Daily]

It’s the same technique that convinces people to act when an airline announces that there are “only 8 seats left at this price”.

If you want people to take immediate action, pushing a limited number of products, a limited price or a limited period can create a sense of urgency. It plays on people’s FOMO, as well as feelings of exclusivity and status.

Take a look at our article on 18 Scarcity Examples that Can Boost Sales for a deep dive into the impact of scarcity and how to harness it.

7. Casper

Subject line: You barked, we listened

Casper’s new product launch email is an example of a brand that knows its audience.

The subject line “You barked, we listened” resonates with dog owners, compelling them to click. This tone carries into the email. 

The use of the word “Meet”, for example, is more friendly and personal to dog lovers used to meeting new pooches. They’ve likely conducted voice-of-customer (VoC) research and understand CTAs like “Get” or “Buy” are too abrupt.

The introductory copy is minimal but powerful. Referring to studies and testing shows readers that Casper has put a lot of thought and care into its product.

Finally, the white background helps draw attention to the CTA and, more prominently, to the GIF of a sleeping dog dreaming of a passing squirrel. Nothing connects with dog lovers quite like an image of a cute dog on your product.  

What you can learn from this email

Tell readers why your product is the best

Casper is an established and respected mattress brand. Its email copy could have been as simple as “Get the perfect mattress… for dogs” and recipients would be interested in learning more.

But Casper doesn’t take this approach. Instead, it explains what went into making the mattress. 

“So our award-winning engineering team spent more than a year conducting extensive sleep studies, testing materials in world-class laboratories, and designing countless prototypes. The result? A perfect mattress… for dogs.”

‘Perfect’ on its own is an empty word. The same goes for ‘unique’ or ‘the best’. Even as an established brand, you can’t rely on these words to get the job done. Explaining why your product is perfect or the best gives it weight (and helps you differentiate). 

If you want readers to take action, tell them why yours is the product they need, and why it’s different/better/more interesting than anything else. 

Use GIFs to increase engagement (but think about accessibility)

GIFs are a fun way to draw attention to an offer and show off a product with personality. But they may not always have the desired effect. 

While most major email clients support GIFs, not all do. If you have a lot of subscribers using some versions of Microsoft Outlook, GIFs will only display as a static image.

This chart by Litmus shows which email clients do and don’t support animated GIFs:

Table showing which email clients support gifs

Text-heavy GIFs can also pose a problem to visually impaired viewers, who may struggle to review content before the animation changes. Additionally, flashing rates of between 2 Hz and 55 Hz are dangerous to recipients with photosensitive epilepsy. 

To ensure GIFs work in your favor: 

  • Keep them simple (Casper’s GIF is good because it works just as well as an image)
  • Avoid overly flashy content
  • Keep file size below 1MB for fast loading
  • Use ALT text for subscribers who rely on screen readers
  • Back up GIFs with headlines and copy to provide context

8. Super Team Deluxe

Subject line: Super Team Deluxe, Now Open! Now this is what it’s like when worlds collide…Are you ready to go?

Super Team Deluxe’s new product release email is an example of the power of great writing.

Rather than using HTML, Super Team Deluxe’s email takes users on a journey with words. 

The headline grabs readers: 

“Wait.. what’s that smell?” 

Posing an intriguing question makes you want to read on to find the answer.

The copy is equally fun, using Super Team’s Deluxe’s quirky conversational tone to tell readers about new products and answer common questions.

The CTA leaps off the page and is consistent with the language of the email, making you want to click it whether you’ve read every word or skimmed through.  

What you can learn from this email

Be consistent in your voice and tone

The more consistent your brand messaging is, the more recognizable your brand will be. This familiarity will help you stand out in a crowded inbox. 

Super Team Deluxe’s voice and tone in emails are consistent with how the brand presents itself on its website and social media. You can tell that it’s them, even without seeing their name.

Aim for this level of consistency in your own content marketing.

That’s not to say you can’t change things up when you need to be more serious, or drop in a joke if you write more formally. But the majority of your emails should be able to be read aloud to your audience with no context and have them know who’s talking.  

9. CW&T

Subject line: In 24 hours

CW&T’s live launch email is another great use of scarcity. By promoting an Instagram Live stream and Early Bird reward tier for its Kickstarter launch, the brand effectively uses FOMO to convince users to act.

The email leverages concise copy, which is cleverly written to encourage readers to get involved:

“Join us on Instagram tonight”

“…get there on launch and tip off your friends”

“We need around 333.333 supporters like you”

“…we do need your help.”

CW&T also breaks up sections with subheadings to appeal to skim readers and gives each part of the email room to breathe. This is important when you have more than one action you want users to take. 

As a final personal touch, the email is signed off by the CW&T team.

What you can learn from this email

Remove the guesswork

If you want customers to do something, tell them. CW&T leaves nothing to guesswork. 

From the outset, readers are told what’s happening, when, and how to get involved. It backs this up with strong action words and phrases that generate enthusiasm.  

Make it personal

Typically, we talk about email personalization as using recipient names or segmentation to deliver a personalized experience. But a simple sign-off at the bottom of an email is personal too. 

Would CW&Ts email lose anything by not attaching “Sending hugs + gratitude, Che-Wei + Taylor” to the bottom? 

Probably not. It gets its message across without it. But it’s more endearing with it.

You know that Che-Wei + Taylor have written this email and that they’re grateful for readers’ attention. This strengthens the emotional connection between brand and customer.

It’s a small touch, but a powerful one. 

10. Dims

Subject line: Meet Word Table Light from Dims

Dims. is a contemporary furnishing brand that creates modern pieces in collaboration with world-class designers. This product release email from designer light company Gantri keeps with Dims’ minimalist approach.

Copy is used sparingly, with each line is followed by a clear CTA. This keeps everything straightforward. It also lets Gantri put the focus on the product. 

The Word Table Light is showcased with strong imagery that lets recipients see how the lamp looks in different settings.

For those unfamiliar with Dims., the email ends with a short ‘About’ section for readers to learn more.

What you can learn from this email

A picture says a thousand words

The aim of a product announcement email is to help customers understand the product. 

If your product is brand new or unfamiliar to audiences, you may need to go into detail. Willo’s email did this with an explainer video.

If, however, your product is self-explanatory, you can get your message across by showing the product in action. 

People know how lamps work, they only want to see how this one might look in their home. There’s no simpler way of doing this than with images. 

Where it makes sense, let images do the talking.

Conclusion 

Here’s a recap of the key takeaways from the email example templates we’ve covered:

  • Use well-spaced CTA buttons with clear instructions
  • Keep readers engaged with incentives and educational content
  • Where relevant, use influencers and thought leaders to add authority
  • Create teaser emails with just enough details to keep readers wanting more
  • Lead with benefits over features
  • Consider the recipient’s intentions in every email you create
  • Write clearly and concisely, using short paragraphs
  • Use scarcity to drive immediate action
  • Use strong imagery and GIFs where appropriate
  • Be consistent in your tone and voice
  • Add a personal touch to emails

Experiment with these tactics in your own emails. Not every tactic will work every time. Not all will work well together. 

By testing and measuring open rates, click-through rates and conversions, you’ll learn what resonates with your audience and how to inspire action.

The post 10 Product Announcement Email Examples (and What you can Learn from Them) appeared first on CXL.

A Complete Guide to YouTube Analytics

With more than 2 billion monthly active users and more than a billion hours of content consumed every day, the right Youtube strategy can increase brand awareness, engagement, and conversions.  But, cutting through the noise can be a challenge.  Strategically leveraging YouTube’s robust analytics can help you make data-backed decisions and improve performance. In this […]

The post A Complete Guide to YouTube Analytics appeared first on CXL.

With more than 2 billion monthly active users and more than a billion hours of content consumed every day, the right Youtube strategy can increase brand awareness, engagement, and conversions. 

But, cutting through the noise can be a challenge. 

Strategically leveraging YouTube’s robust analytics can help you make data-backed decisions and improve performance.

In this post, we’ll tell you how to use YouTube analytics to grow your brand and generate more video content views.

Why YouTube analytics is critical for measuring content and paid ad performance

YouTube generated $19.77 billion in ad revenue in 2020. Ahead of both Instagram and Facebook, it has the highest ROI for video content. Done right, YouTube ads are a profitable endeavor.

But you can also accumulate significant exposure and revenue through an organic YouTube strategy. Best practice is to start with organic, understand what techniques work for your content, then boost with paid. 

In both respects, you need to understand if your content and paid media efforts are performing. There are four key reporting areas within YouTube Analytics: 

  • Overview
  • Reach
  • Engagement 
  • Audience 

As with most platforms, there are metrics that matter, and vanity metrics. Similar to app store optimization (ASO), it’s easy to fall into the trap of chasing shallow wins. 

For ASO, this happens when you prioritize downloads over long-term value. Given that most users abandon apps within 30 days post-installation, high downloads don’t lead to high audience retention, satisfaction, or revenue. Time-to-value is much more important.

With YouTube, for organic, average view duration (AVD) and click-through rate (CTR) should be prioritized over YouTube search optimization, descriptions, tags, and other vanity metrics. YouTube elevates videos (and channels) that prove meaningful engagement, which is exactly what AVD and CTR do. 

By elevate, we mean high AVD and CTR can get you into YouTube’s recommendation engine. 70% of the time, content users consume is recommended by YouTube’s AI and algorithm, so you want to be on this ride. 

Why does YouTube elevate AVD and CTR? Both metrics represent high engagement. 

AVD is total watch time divided by total video plays, meaning viewers watch for longer, and sometimes even replay. And a high CTR represents that your hook and thumbnail resonate with your audience enough to click and view.  

Understanding which videos resonate and engage allows you to replicate success and optimize those that fall flat.

Once you do master your organic marketing strategy, you can bring YouTube ads into the game. With the right targeting and content, paid ads can expand your reach and revenue.

As with any marketing play, make sure to align your ads with the stages of the funnel. Choose an ad format and campaign that aligns with your end goals (e.g. are you looking to generate traffic or leads?).  

The three most critical metrics for monitoring ad performance, especially regarding ROI, are View rate, CTR, and Earnings per view. These tell you how many people actually watched your videos, clicked on them, and the money earned per video view. 

Of course, a video with low ROI can still generate awareness, expand impact, and lead to sales. Peripherally, you should monitor all metrics, but prioritize the ones that align with your goals and drive profitable traffic. 

How to implement YouTube analytics

Setting up your YouTube analytics is straightforward. To start, go to your profile in the upper right corner and select YouTube Studio:

Screenshot of YouTube account menu

You’ll see a list of icons and options on the left-hand side of the screen beneath your profile icon. Select Analytics:

Screenshot of YouTube channel options

There are four Channel Analytics tabs in your dashboard (five if you have a Revenue option). Here, you’ll find detailed metrics regarding your account:

Screenshot of YouTube report tabs

For more advanced analytics, select Advanced Mode in the top right corner. This will give you individual metrics for each of your videos: 

Screenshot of YouTube advanced mode

You can also connect YouTube analytics to your Google Analytics (GA) account. This makes it possible to track performance directly from your GA dashboard. 

From your GA dashboard, click the Admin gear icon in the lower left-hand corner:

Screenshot of Google Analytics admin menu

Then, select Create View in the upper right corner. Fill out the form by selecting a view name and choosing your time zone:

Screenshot of Google Analytics view creation

To create a filter that shows only YouTube traffic, select Filters. Name the filter and select Custom:

Screenshot of Google Analytics view filter

Next, click Include and choose Hostname from the drop-down menu. Type “youtube” in the Filter Pattern Box and save:

Screenshot of Google Analytics filter options

Getting the most out of YouTube’s reports 

Here are some of the key reports you can run in YouTube Analytics, and how to leverage them to improve your strategy. 

Overview metrics

The Overview tab is where you’ll find your overall YouTube channel performance analytics including:

  • Subscribers
  • Realtime views
  • Top videos
  • Channel watch time
  • Channel views
Screenshot of YouTube overview report

Use these metrics to identify average trends and get a quick snapshot of channel performance.

For example, subscribers are your most loyal fans. If your goal is to increase loyalty and engagement, pay attention to them. They watch 2x as many videos as non-subscribers. But that’s only if subscribers actually engage with your content and channel. 

You want growing subscribers and growing watch time from subscribers to increase in tandem. This way, you can measure reach next to engagement to monitor if your videos are having the desired effect. 

Reach metrics

If you are creating TOFU videos, the reach metrics is where you’ll learn how viewers are finding your content. Reach metrics include the following reports:

  • Impressions
  • Impressions click-through rate (CTR)
  • Traffic sources
Screenshot of YouTube reach reports

As mentioned above, most people find your content from YouTube’s recommendation engine. Only 15%-25% comes from search. The rest are served up as suggested videos or accessed via browse features: 

Screenshot of YouTube report traffic source types

You should still optimize videos to rank for keywords, especially if awareness and reaching a larger audience is important. But Google prioritizes “Video Keywords” when it comes to ranking. Video Keywords represent keywords that already are tied to videos on the platform. 

Brian Dean puts it this way:

“In my experience, if you optimize your video around a keyword that doesn’t already have a video in Google, it’s going to be VERY hard for it to rank. The simplest way to find Video Keywords is to search for your potential keyword in Google. If you see at least one video result in the top 10, great. If not, you may want to consider a different keyword.”

Don’t waste your time trying to make a nonvideo keyword rank. Also, focus on video keywords that have a result in one of the top three spots in Google. 55% of all clicks come from these top-ranking keywords.

Engagement metrics

For your MOFU content, focus on the Engagement metrics tab. This gives you insights into how viewers are interacting with your videos, including: 

  • Average view duration
  • Top playlists and cards
  • Top videos and top videos by end screen
Screenshot of YouTube channel analytics

We’ve explained why AVD is given so much weight in the recommendation engine. But what about playlists?

Good playlists promote replays. With playlist reports, you can see how individual playlists are contributing to your channel’s performance. Also, session watch time increases every time people watch your playlists. This is important.

Session watch time, like AVD, shows how long viewers spend interacting with your content. Longer sessions lead to better engagement. YouTube loves this, as it means people are spending more time on their platform. 

One way to optimize session watch time is to optimize playlists. An easy trick is to make adjustments to the video order. If you have a poor-performing playlist (or an old one that’s lost traction), simply reorder the individual videos based on video performance.

Use Analytics to see which videos are being viewed the most and move them to the top of the playlist:

Screenshot of YouTube report top video content

By frontloading the most engaging videos, you hook your audience in and boost the chances they’ll stay around for the duration of the playlist.

Also, make sure your playlists align with your core messaging. Who is your channel for? What is that person trying to achieve? We target experienced marketers looking to scale and drive conversions, so our playlists speak to the topics they care about:

Screenshot of CXL's YouTube channel

Audience metrics

The audience tab will show you who is watching your content. Here’s what you’ll find:

  • Unique viewers
  • Returning viewers
  • Watch time from subscribers
  • When viewers are on YouTube
  • Audience demographics
  • Top geographies
Screenshot of YouTube channel analytics and audience metrics

We mentioned watch time from subscribers earlier. This metric matters because subscribers alone can be a vanity metric. 

But subscribers that engage are like rewards members that make frequent purchases. Their intent (subscribing, or signing up for a program) actually matches their behavior (watching videos, or making purchases to unlock rewards).

To increase subscribers, make sure you have a great UVP. Potential subscribers must understand:

  • Who you are
  • Why they should care
  • What makes you different
  • What value they’ll get from subscribing

Create a compelling trailer that answers these questions right off the bat. And make sure to include CTAs at the end of every video.

Revenue metrics

This tab isn’t available for everyone’s YouTube analytics. If your account is eligible for monetization features, then this tab helps you track your earnings. To become eligible, you have to be accepted into the YouTube Partner Program (YPP).

To qualify to join YPP and run ads on YouTube videos, you need to have more than 1,000 subscribers and more than 4,000 valid public watch hours in the last 12 months.

Here are some of the reports that live within monetization:

  • Estimated revenue and estimated ad revenue
  • Revenue Per Mille (RPM)
  • Transaction revenue
  • Estimated monetized playbacks

Earlier, we noted that View rate, CTR, and Earnings per view matter above all. You can access key YouTube Ads metrics by creating reports from within your Google Ads account: 

Screenshot of Google Ads menu

If your ads aren’t effective, they’ll have a low view rate, which signifies people are skipping them. A low CTR means few people are clicking on your ad, so it’s not generating interest. Low earnings per view can mean a number of things. 

If you have high view rates and CTR, but low earnings, there’s clearly a barrier to purchase. For example, a CTA that prompts putting money down in a TOFU ad (the CTA here should be to learn more, not hand over money just yet). Or, your landing page could be broken, or have broken CTAs within it.

As for the revenue you can see from YouTube Analytics, RPM is important because it gives you a snapshot of ad earnings per 1,000 views. It represents revenue after YouTube takes their share, so it’s net earnings rather than gross: 

YouTube's RPM announcement on Twitter

With this data, you can better contextualize earnings while still measuring which videos have the most impact. 

How to optimize video content by analyzing your competitors 

Comparing your content to competitors in your industry helps identify gaps and opportunities in your strategy. You can find what’s trending in your niche, what type of audience base your competitors have, and what elements are successful in their videos.

You don’t need additional software or expensive tools to conduct a competitor analysis. 

Identify competitors in your industry

Find competitors on YouTube by searching for similar products, services, locations, and keywords. Make a list of a few competitors that have an active presence and a strong following.

For example, if you owned a content marketing agency, you could look for “B2B content marketing agency” or “content marketing” to see who has videos that rank:

YouTube competitor research example

You can also use keyword research tools, like Ahrefs and SEMrush, to augment your competitor research.  

In Ahrefs, set the Keyword Explorer Report to YouTube and search for “content marketing”. This will let you view search volume and identify potential ancillary keywords to target: 

Screenshot of keyword data from Ahrefs

You can’t leverage this to see who’s currently ranking for these keywords, but you can use it to identify what content to produce next. (Remember, videos that are tied to top-ranking keywords are easier to rank for yourself.)

Review their video content

Look through the competition’s videos, and analyze the following: 

  • What type of content is getting high engagement? 
  • What type of videos are they creating? 

Take outdoor-products brand Yeti. Their YouTube page is built for brand storytelling. Almost every video tells a story, and only sometimes features their products. 

Importantly, every video involves somebody doing something in nature, and people that spend time outdoors are their target audience:

Screenshot of Yeti's YouTube videos

Clearly, it’s working. Not only do they have high view counts, they have extremely positive engagement:

Screenshot of Yeti's YouTube comments

If Yeti was one of your competitors, it would be worth seeing if storytelling resonates with your audience, too. 

Freemium tools like BuzzSumo can help you turbocharge this research. You can analyze all of their content, see what gets the most shares, analyze the keywords they are ranking for, monitor content performance, and explore untapped growth opportunities (that they are ignoring). 

And, Tubebuddy is well-known among Youtube marketers as the browser extension of choice for more views and subscribers. The platform is designed to help you research, publish, optimize, promote, and test content quickly. The extension comes with advanced keyword research, time-saving templates and tools, and simplified A/B testing. 

Conclusion

YouTube is an excellent platform to build brand awareness, engage an audience, and generate revenue.

On its own, YouTube analytics is a powerful tool that can be used to grow your reach and revenue. Paired with Google Analytics and data-gathering tools, you can focus on metrics that matter and hone in on what’s working (and where there’s room for improvement). 

Be sure to regularly monitor your metrics to stay on top of trends and keep tabs on your competitors to take advantage of opportunities in your niche.

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