Ask Me Anything: Channel Market Fit

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We recently hosted an AMA for f7 Founders featuring Sam Wheatley, VP of Growth Marketing at Noom, a subscription mobile app that utilizes a cognitive behavioral approach to weight loss and healthy living. Noom recently completed its Series F fundraise with a valuation of $4.24B, having raised more than $668M venture capital funding to date. Sam has played an integral role in Noom’s success as the leader of their growth team for the last five years, starting as the Director of Growth Marketing before becoming a VP.

During this AMA, we discussed Channel Market Fit with Sam. Throughout Noom’s growth, their team has leveraged a variety of digital and offline acquisition strategies. Sam shared Noom’s process for evaluating various growth channels, how they diversified their media mix as they grew, how to choose the right channel(s) for your product or service, and more.

Below are seven (ok … 8) takeaways from the conversation:

1.Break out your growth efforts into phases:

Sam spoke about Noom’s growth marketing evolution, citing three key stages of channel growth:

Hyper-Focused Single Channel Phase

Noom started with a single channel as a launching pad. The channel / platform they chose given their audience (more below) was Facebook. Choosing one channel to start allowed them to focus all of their efforts on making that platform scale, investing in numerous strategies and testing for creative, landing pages and more.

Channel Diversification Phase

Once a solid foundation is built on one channel, many companies and their investors often look for channel diversification as an important KPI.

For Noom, this brought forth an acceleration of new channels, such as Search, Pinterest and expanding outside of digital to TV. As you add more channels, this brings up important questions around measurement, media mix modeling and attribution, which became more of a focus for Noom as they expanded (more on that below too).

Brand Building Phase

Noom recently entered a third phase focused on building brand awareness and consideration for its suite of health products. Sam views this new phase as a hybrid Direct Response and Brand building phase, as it is just as critical to maintain the core performance marketing strategies implemented in the first two phases. Brand will not deliver immediate revenue and is more difficult to measure impact, requiring a deeper time and resource investment to fully understand. However, over time it has the potential to become just as efficient and economically viable if done right.

Another important consideration about the timing of brand activation is how well known your category is. For Noom, weight loss is a well defined space so less education was needed. There was already pent up demand they could capitalize on and focus on their unique offering, rather than the category itself. Because of this, driving revenue was more relevant than driving brand in the early days. As the space became more saturated and they looked to expand the product, brand building became more relevant for their business.

If your category is relatively unknown, you may need to consider more branding and education early on. If it is a well-defined space, brand building might be something you can hold off on and devote more early resources to driving acquisition and revenue.

2.Understand your customer and where to reach them:

Sam views Channel Market Fit as the sweet spot where audience and the channel intersect. To identify this, you need to deeply understand your target audience and their state of intent as well as the tooling and targeting available to you.

Ask yourself: Who is your customer? Where do they spend time? And how can you convert them?

For a mass market service like weight loss, it made sense to start with Facebook as the core channel given its large population and sophisticated algorithm to find users.

For other services like B2B, a platform like LinkedIn might make more sense to start with where their is more emphasis on business and professional networking.

For B2C businesses, tapping into the rapidly growing trend of Creators (influencers) is worth considering. It adds new creative and perspectives to the mix, and allows companies to find niche audiences as a result.

Even if a channel isn’t a perfect fit, consider what alternative strategies can be employed to make it work to tap into the audience there.

3.Establish a measurement framework that works for your business:

There are many ways to think about measurement in the digital advertising world. There is no one size fits all, and it can evolve as companies add more channels.

Noom began with a relatively basic measurement model, relying on the data derived from ad pixels and native ads manager results with a Last Touch Attribution model in mind. As they diversified channels, they evolved to a Multi-Touch framework that combines both channel reporting and a post-purchase customer survey. This allows them to allocate credit based on two data points – where they see customers come from as well as where they self-attribute.

4.Get ahead of discussions with investors about how you will use funds to grow:

Having the capital to invest in growth has been critical to Noom’s success. In order to obtain the capital needed to execute on their strategies, they provided detailed information on the inputs required to grow and the expected outputs of those efforts.

For example, companies can project improved conversion rate by X% for every X number of funnel experiments. In order to run X funnel experiments, they need Y number of visits to the website. In order to get Y number of visits, they need Z amount of capital. This will help investors understand a detailed plan to use the funds to grow.

5.Develop hypotheses and conduct experimentation:

Testing has been a central tenant of Noom’s growth strategy. They develop hypotheses as to what will and will not resonate with customers. As they found results from that, they dove deeper into those concepts and developed them further. The duration and design of the test was also dictated by what they wanted to learn.

  • Creative Testing: For example, creative testing is often frequent and fast – Noom runs roughly thirty creative tests per week with four to five ads. They run at a high volume, knowing there will be some uncertainty, but to validate that they are heading in the right overall direction.
  • Lift Testing:
    • Other tests are more time intensive. For example, they utilize Lift testing to understand their incremental Customer Acquisition Cost (iCAC). This helps them calculate the incremental value each channel is adding to their media mix, and allows them to adjust modeling and budgets accordingly.
      • For example, one structure utilized four Lift cells through Facebook – the cells had the same audience size and targeting, but different budgets assigned to each ($10k, $20k, $40k and $80k). They were then able to see the difference in iCAC and create a plot line to see their overall cost curve.

6.Continue putting effort into leads that don’t convert right away:

For leads who provide email to Noom but don’t convert, they continue to nurture those users over a period of time to drive conversions. One way they do this is with a 15 day email drip campaign that includes a series of education about Noom, how it works, and incentives to sign up.

Don’t forget about these leads – sometimes customers take more time to convert, and they are worth pursuing! This is particularly important for B2B businesses, where customers tend to have a higher threshold to convert.

7.Organic marketing can work, but may be too slow for your early stage goals:

Organic marketing is a good strategy to integrate, but has its limits. You can’t scale it the way you can with paid acquisition, and it is not as predictable. Talented organic marketers focus on getting content to go viral. It is amazing if you can achieve that, but it is very hard to do and not a guarantee. It is also challenging to measure the downstream impact of organic on brand awareness and acquisition, which makes it difficult to quantify the impact with investors.

As you grow, businesses often add an organic marketing hire, who can focus on growing your social pages, developing a Search Engine Optimization (SEO) strategy and adding CRM email referrals.

8.Consider what changes in your strategy and hiring as you grow:

As you reach greater scale, take a step back to consider what does and does not change in your strategy and the needs of your team. Does your focus remain on performance? Does it shift to brand building? How do internal processes change if we do shift strategies? From there, determine the talent you need.

When Noom started out, the two co-founders split responsibilities between fundraising and operations. On the operations side, they had a lean team of three in the early days – they had the co-founder, Sam as Director of Growth, and someone focused on product all driving the core operations.

As they grew in scale, so did the team. Questions like “Do you hire a team to manage new channels?” became more relevant. With that in mind, consider building org structure around functional expertise, with heads of each area. For example, you could have a digital pod, an offline pod and an organic pod.

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