Insights into e-commerce, marketing, & software, plus FastSpring news.

In an interesting report on customer acquisition for software, Trialpay, a system for ad-funded alternative payments, has revealed some trends that are worthy to keep in mind when assessing your current marketing strategies—and perhaps adding some to your repertoire that haven’t occurred to you yet.

The report, entitled “2010 Report: Best Practices for Acquiring Software Customers,” presents findings from a survey of 184 software firms across an array of categories.

Of the key findings, we found several that you may find interesting:

• Software companies expect 1% – 3% of customers using the free version of their software to upgrade to a paid version.
• Software companies spend on average 39% of revenues on customer acquisition.
• The most effective method—cited by 29% of the surveyed companies as their top method—for customer acquisition is SEO.
• After SEO, the following methods were ranked as follows: Search Engine Marketing: 21%; E-mail Marketing: 14%; Other: 13%; Display Ads: 10%.
• Surprisingly perhaps for some, Social Media Marketing was ranked at 6% (though growing, certainly), followed by Public Relations at 5%.
• A quarter of software vendors cross-sell their products in other vendors’ carts.

Also of note and a prime focus of the report, as indicated by its title, was the high cost of customer acquisition for products with a relatively low price point. The report shows that companies with a price point range of $19 – $30 spend on average $13.60 per new customer, while companies with higher price ranges ($34 – $50) pay $15.50 for each new customer. These findings prompted a blog post at GetApp.com with the title: “Are customer acquisition costs killing your software business?”

Some of the key takeaways from this set of data could be:

• Don’t sell yourself short. Do price testing to find the ideal price for your niche and customers, to maximize revenue.
• Explore trial or free versions to get the attention of potential buyers. If your software is being used free, there is a good chance a worthwhile percentage of users will want the full version.
• Never underestimate the value of thorough and long-term SEO efforts, including innovative keyword strategies that may acquire traffic from a tangentially-related search.

There are some strategies presented that are, while perhaps marginally counter-intuitive at first glance (one involves letting users “steal your software”), innovative on second or third glance.  Let’s list our top 5 of the 8:

1. Use specific keywords to attract people searching for the free version of your software. Sales can be made by targeting free versions, but also mixing in terms such as keygen, patch, unlock, in effect reclaiming for your own business the pirated software market segment.
2. “Retarget” active prospects. Retargeting presents ads to prospects that have previously visited your site, but for whatever reason stopped short of purchasing. Third-party retargeting vendors mentioned in the study are Criteo, Fetchback and Dotomi, and Google also offers its own (Google Remarketing). These ad programs serve as a kind of automatic, persistent followup with potential customers, keeping your brand in view as they surf the web away from your site—smart marketing, focused and potentially quite cost-effective. Retargeting may not be appealing to all vendors; some may feel it annoys customers or they are turned off by the tracking element, so you would have to take those concerns into account.
3. Double-down on referral incentive programs. Word-of-mouth marketing has evolved. Recommendations can be fostered through referral programs. Incentives such as free copies can be put in place for referring customers. Social media comes directly into play here: a tweet by influencers can peak interest in a product and even produce a lucrative viral response chain. Coupon sent to existing customers for distribution to friends is also suggested.
4. Partner with complementary products. Finding companies with complementary but not competing products can form the basis of innovative partnerships. Cross-marketing on websites and newsletters, mutual discount exchanges and bundling can put your product before many eyes that would otherwise not see it.
5. Offer a “Lite” version & give it away free. Free versions developed with “feature-clipping” can create a strong incentive for users to upgrade. Distribution channels for such versions can include shopping carts of partner vendors. As one of the key findings of the report reminds us, a non-trivial percentage of customers using a free version will upgrade to a paid version. While a Lite version differs from a Trial version, it can serve an important purpose as well.

We did find some room for growth in Trialpay’s inquiries, from FastSpring’s perspective of working with thousands of software vendors on a daily basis. For instance, what are the mechanisms for purchase (shopping carts, e-commerce systems, order flows) and how do they play into customer acquisition? With all the focus on marketing, it is easy to lose sight of issues such as cart abandonment, the ease & aesthetics of checkout, and other factors that can make or break an “acquisition.”

Secondly, beyond acquisition, how does retention come into play? Specifically, what role does good, reliable customer service (admittedly a qualitative rather than quantitative factor, though one that might well be broken down into constituent parts) come into play?

To read the full report for yourself, go to trialpay.com. You will need to register to get the report for free.

Recently a software publisher asked some questions about affiliate programs on a forum. He’s had an affiliate program for about 6 months and is disappointed in the results. He’s using a small affiliate program tied to an e-commerce service, as opposed to using one of the large 3rd party affiliate networks which hosts affiliate programs for many well-known software companies and has tens of thousands of affiliates of all types.

He’s so far only getting 2-3 new affiliate signups each day, and has a total over 6 months of about 100 affiliates. When he searches online, he’s unable to find affiliate links pointing to his site even though the majority of his affiliates signed up some time ago and have had ample time to add links to his site. He has emailed some of his affiliates but got no replies back. His affiliate program is set to “auto-approve” new affiliates who want to be part of his program. He is yet to pay out any commissions due to the lack of affiliate traffic. His affiliate account manager hasn’t been able to help him to improve the results unfortunately so far. He’s not sure what’s gone wrong and he asked for some guidance. Here were my thoughts which I shared with him, in case this is helpful for others…

I think there are a few issues at play here:

• As silly as it seems, the majority of affiliates who sign up for an affiliate program will never add a link to your site or do any other promotion. That’s just how it goes with affiliate marketing (and often in marketing in general). You have to appreciate the ones that actually do something post-sign-up as they’re few and far between.
• As you mention, it’s good to communicate with them to encourage and even incentivize them to add links, though as you’ve seen most don’t respond. A lot of affiliates are signing up just to check things out such as your ads and products or affiliate offer, or because they think someday they may want to add a link, or they may want to buy your product themselves at some point and save themselves money, or for a host of other reasons. It’s the same kind of perplexing marketing challenge as when most people who land on a website don’t take an action, why 1/2 the people who start a download never complete an installation, why so many people abandon shopping carts, why so few people who download and try a software product actually buy it, and so on.
• 
  
  
  
  

  Most of the top affiliates out there are not members of software-specific affiliate programs tied to a particular e-commerce system. I can tell you from experience, but just think about it…if you were a top affiliate, where would you invest your time/resources/efforts? Commission Junction (CJ), LinkShare, ShareASale, Google Affiliate Network (formerly Performics), etc. where the best quality advertisers and affiliate systems are, including lucrative, at times well-known consumer software affiliate programs. I don’t have a lot of experience with Clickbank, though I’ve heard of both positive and negative experiences. As an affiliate, you likely haven’t even heard of the names of software-specific e-commerce companies much less those firms’ affiliate networks. This is why instead of having our own affiliate program, at FastSpring we integrate with the leading affiliate networks so that you can access those networks which have attracted the large affiliates who can really generate substantial revenue for a software publisher. With that said, there are no doubt some exceptions, and there are some who don’t have success with the larger networks in the end as well, but most software vendors will end up disappointed if they expect significant revenue to come from the e-commerce-specific affiliate networks. We’ve been doing this a long time and have ourselves been software publishers in numerous affiliate networks of all stripes. These larger affiliate networks also tend to offer more extensive affiliate management functionality than the smaller networks.

• If you do end up being one of the few vendors that has success with an affiliate program that is tied to an e-commerce service, you have a new problem in that you’ll be increasingly tied to that e-commerce service so if your overall e-commerce experience becomes poor (bad customer service, rates increase, platform never gets updated, etc.), you’ll be stuck with that e-commerce service and the problems you’re having there since you’ll have a tough time leaving behind the affiliate program you built with that e-commerce service as opposed to a 3rd party program which is separate from your e-commerce service. You don’t want to be that tied to your e-commerce service, even if it’s FastSpring; it’s just not a good business practice to create such barriers to being able to switch if you run into trouble. You always want to be in a flexible situation where the e-commerce service doesn’t have so much leverage over you.
• Be careful having your settings on auto-approve. You may find out later that that was a mistake. In my experience, it’s OK to auto-approve affiliates who reside in the standard countries, but if you auto-approve in certain countries that tend to produce a lot of affiliate fraud (Vietnam, Nigeria, etc.) you may end up being taken for an expensive ride. I have nothing against any country, I’m just speaking from my affiliate marketing experiences. I recommend reviewing applications from certain regions.
• By the way with some of the larger affiliate networks like a CJ.com, you’ll get at times hundreds of new affiliate sign-ups per day (you mentioned getting just a trickle of signups), though the same will be true that only a small % will ever be active.
• You’ll want to offer a good breadth of different ad types (banners, keywords, html email perhaps, coupon offers, product pages, etc.).
• Feel free to checkout a short post I did in the past: “Is An Affiliate Program Worth Doing If You Are A Small Software Company?”
  http://www.fastspring.com/blog/2008/05/is-an-affiliate-program-worth-doing-if-you-are-a-small-software-company/
• FastSpring has rolled out an affiliate campaign management service whereby an affiliate expert personally manages and grows software vendors’ affiliate program revenue. The program manager works the affiliate program just like a customer acquisition funnel by increasing recruitment, link placement and the number of affiliates generating sales. However, there is an added cost to it and so it only makes sense to consider if you have an affiliate marketing budget in the thousands, which means it unfortunately isn’t a good fit for every situation. With this said, if the opportunity is the right fit, a revenue share structure can often replace the need for a base fee. More info on the affiliate expert program is at:
  http://www.fastspring.com/features.php#thirteen
• Over time in growing your business you’ll find that in most cases, the best affiliates are often those you recruit on your own as strategic partners. The best way to find those is to research companies/sites that you think might have a strategic interest in sending some traffic your way. In many cases the partner you contact will be willing to drive new customers your way in exchange for a revenue share since the audience and product fit are of strategic value to your partner and to their customers. Logistically, you can use your affiliate program to manage the relationship if you’d like, or (provided you’re setup to track your order page via Google Analytics) you can track your partners’ promotions through this URL Builder system from Google:
  http://www.google.com/support/googleanalytics/bin/answer.py?hl=en-uk&answer=55578

I hope these tidbits learned over the years prove helpful to some.

I’m Shawn from the FastSpring Support Team. In an effort to help you to more fully utilize the breadth of features contained in the SpringBoard e-commerce platform, I’d like to talk a little about some basic couponing…

Sales drive sales.  And what better way to have a sale then the good old coupon?  Coupons have been a tried and true promotional mechanism for far longer than the Internet has been around. FastSpring’s built-in features allow you to offer your customers coupons, just like Mom used to clip from the mailers.  And advanced coupon options bring the idea of the coupon into the digital age.

Coupons are promotional campaigns for your product. After you set up a coupon in our system, you’ll have both a Coupon Code and a URL which can be used to trigger the sale.  If the URL is used , the coupon will automatically / dynamically be applied to the product.  If a customer has the coupon code, they will have the opportunity to enter this code during FastSpring’s checkout process.  Distributing a URL with the code pre-applied will cut down on confusion, but it also makes the promotion slightly easier to share and be abused.

Using SpringBoard (FastSpring’s backend platform), you can create a coupon by clicking Offers from the main store view, the view you arrive at once you login.  As coupons are essentially a discounted price, you’ll be clicking Create Discount.

Let’s say we’d like to create a “20% Off Back to School” coupon.  I’ll call it “Back to School”, choose “Applies to All Products” on the Applicable Product drop-down (which will make it apply to the entire store), “Percent Off,” and enter “20″.  Well, that was pretty easy.

For extra pizazz, we can fill in the optional field, Display/ Messaging, with “20% Off for Back to School!!!” and it will add this promotional message when the promotion is activated. This isn’t necessary, but it’s a nice option to consider.

Now we have a “20% off” promotion that applies to all products.  It’s still in test status by default when it’s created, so it’s not impacting our live sales in any way. But we want a coupon, not just a sale across every product for every visitor.  To set up the promotion as a coupon, we have to go to Edit (Conditions) and select Coupon Condition and hit Next. It’s new, so under option 2 we can put in BACKTOSCHOOL. This is the code that will need to be known by the customer or supplied in a URL.  After clicking Save, the coupon is set up.

Since we’re running a seasonal sale, we probably need to restrict when the coupon is available, as well.  So by clicking Edit (Conditions) and choosing Date Condition, we can enter start and stop dates for when the promotion will run.

After clicking Create to set the date range, you’ll be back to the edit page for the Offer. You can use Store Testing in the upper right-hand corner of SpringBoard to run a test order using your coupon to confirm it works as expected. You will need to click on the Optional Parameters tab and input the coupon code to test with the coupon active, or you can also just input the coupon as part of the checkout process when prompted. Then, you’ll want to use Move to Active Status in the right-hand column to set everything live for your customers.

So, how do customers take advantage of your offer?  One option is that they simply are told the code is “BACKTOSCHOOL” and enter this when prompted through FastSpring’s normal check out process.  The second option is linking them to the product by a special URL, which passes coupon=BACKTOSCHOOL.  So, in effect, you are pre-filling the coupon for the customer.  An example URL would look like,

http://sites.fastspring.com/yourstore/product/yourproduct?coupon=BACKTOSCHOOL


That’s it! It’s really very simple once you try it.  Under Reports, a pie chart is available to track how your coupons are being used.

Shawn from FastSpring Support