Roman Kirsch

Founder & CEO of Lesara

Speaking at TEDx in Berlin

The last TEDx event in Berlin was all about the vast World of Opportunities.

Having myself been lucky enough to be able to use some of the opportunities in life, I was excited to be there and connect with a fantastic crowd and inspiring speakers.

Here is the video.

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Managing Loyalty and Maximizing CLV in the Online world Part I.

Earlier this year I gave a talk at the Onlinemarketing Rockstars conference in Hamburg on the big trends in the Marketing industry.

My main point has been, that Loyalty Marketing is still a hugely underserved market in the ad-tech industry and bears plenty of potential for retailers, but also other online players, to improve their sales & ROI

 

 

Spending money on retaining existing customers (filling the holes in the funnel) leads in most of the times to a higher ROI than just acquiring new customers.

The big question for many companies is, how to measure the long-term effectiveness of their marketing dollars and the long-term prospects of their business model.

Here are some thoughts that might help you on this path:

  • The main metrics to focus on, no matter what business you are in, is the CLV (Customer Lifetime Value). How much more revenue does a customer generate over his lifetime minus the costs that can be attributed directly to the customer (marketing, COGS, payment costs, etc.)
  • Focus on the right metrics at the right time. It's not a bad thing to start optimizing for CPA (Cost -per-Action) in the very beginning. It is however a bad thing for your business if you continue to optimize on CPA even after you have sufficient data to optimize for your ROI or your CLV

 

An overview of how to move from optimizing on CPA to CLV 
over the lifetime of your business cycle.
 
  • However, 95% of the time companies compute a completely inaccurate estimate for the CLV of their customers. They get it wrong.
     
  • Some of the wrong methods include (and I have seen all of them)
    1. Taking the average revenue per user (ARPU model)from the past and forecasting the same number.
      • Example: A customer signed up with your store and spend €30 in the first 3 months (€10 per month). For your business model you assume that the Average revenue per month for the next couple of years will be €10. 
      • Why is this wrong? - You don't account for churn, reactivation costs (e.g. vouchers, retargeting, mailings)
    2. Taking past user cohorts and using a linear regression model to forecast future behavior
      • Example: You take all the users that signed up last January and see what their revenue has been after 10 month (in October). After averaging this out for some of your monthly cohorts, you estimate the monthly revenues of your current cohort into the future.
      • Why is this wrong? - Although this method is way more accurate than the previous one, many factors that affect the CLV are not accounted for. Seasonality, the mix of the cohort, or for example the products you offer on the website may be completely different than the year before. Many times the early adopters are your best cohorts and using that data leads to overly optimistic CLV projections for the future
         
  • So what is then the best way to calculate the CLV of your customers/ users/ visitors?
     
    • The key is to forecast the CLV on USER level - so an individual CLV for every single person. This also allows for the first time to target users individually
    • Apply machine-learning techniques and probabilistic models so that recent changes on your website, seasonality, macroeconomic environment can be included into the forecasts
    • Include more factors in your CLV than only the revenue. Some of the factors can be
      • Transaction-related factors (Av. basket value, time of the purchase, day of the purchase, transaction frequency)
      • On-Site behavior (time-on-site, bounce rate, frequency of visits over time)
      • Soft-factors (browser, device, marketing channel, etc.)

This will go a long way in accurately forecasting the CLV of your customer base - and better decision-making on when to invest in marketing and where.

Average margin error when using different methods to forecast CLV (courtesy of custora.com)

 

In my upcoming post I will suggest a couple of effective ways to actively increase the CLV of your user base in a few steps.

 

More infos on this topic in my Speech at the OMR 2013 in Hamburg 

 

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Amazon in geil - Fab on the cover of Business Punk

Happy to see that the Fab brand has not only become mainstream popular with consumers but also with media.

 

It's just the beginning :)

 

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Why Entrepreneurs Day in Tegernsee is a conference worth going to

Usually i am not a big fan of conferences – they take away time from productive things like building your business and getting things done.

Hence I was pleasantly surprised by the Entrepreneurs Days that Cornelius Boensch has been organizing over the past couple of years and that have evolved to the must-go-to place for entrepreneurs from all kinds of industries.

 

I really enjoyed the days due to non-obvious reasons:

  1. The people who go to conferences are usually lame – they come to sell you something o rare the kind of eager networkers that collect business cards. Quite the opposite at Tegernsee. Almost everyone I met has been exceptionally interesting.  And what made people interesting was not their successes but especially the willigness to talk about mistakes and failures, which is rare in those settings.
  2. The topics have been broad and surprising. Self- and employee coaching, keeping your inner balance, renewable energy projects in the Philippines, media invests in Colombia and sport athletes gone business men like Oliver Kahn do actually entertain just as much as the Oktoberfest atmosphere in the evening.
  3. Last but not least the location at Tegernsee is the perfect spot to switch off and completely focus on the people. Every one enjoys himself in the here and now.

So big congrats to the Mountain Team for making this happen and thanks for inviting me on the panel to talk about international roll-outs and how to scale companies in a short time span.

 

Looking forward to attending the conference for many years to come!

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Recap of 2012 and Wishes for 2013

A couple of days ago the German magazine gruenderszene.de published some New Year's Resolution of mine for 2013 and a general recap of 2012.

(here is the link for those who speak German: http://www.gruenderszene.de/allgemein/fab-neujahrs-resolution)

2012 has been an intense year for me personally, and for most of the people that have been involved with me both on a private and professional level. There are not just enough words to express how much we have accomplished at Fab, how impressed I have been by so many of our team members and how the internet world itself developed over the past months. 

Here are 3 observations of 2012.

1. PEOPLE I am extremely proud and humbled by all the great people that we hired - it's been amazing to see them grow and develop into leaders.

2. MACRO-SITUATION We all witnessed the preliminary culmination of the internet hype (be it justified or not) with the Facebook IPO. Although there have been some huge financing rounds afterwards, including the $105m of Fab, both VCs and start-ups have a harder time raising money and achieving valuations that seemed plausible just a couple of months ago. In particular the second financing round, the so called Series A, leaves many start-ups struggling globally.

3. EUROPEAN TECH Although there has been much hype about certain cities and Europe and plenty of conferences and get-togethers, only a few promising up&coming start-ups evolved in Europe in 2012 - and unfortunately even fewer that have been truly innovative. 

 

This leaves me with 3 wishes for 2013:

1. PEOPLE I plan to continue working together with people I trust, enjoy being around with and who have high moral standards. A shared framework of ethics and principles is essential. Life is short and i decided a while ago that it's definitely too short to work together with people that don't share the same framework. 

2. MACRO-SITUATION As interest rates, bonds and alternative investment tiers still struggle to generate returns I am fairly confident that there will be plenty of interest from institutional investors and their backers to support promising businesses, especially in the high-growth areas of mobile, SaaS, Big Data and Consumer Internet. I expect the Series A crunch to disappear and we might even be ready again for    some companies going public again, potentially also in Europe.

3. SUPPORT Last but not least, over the past months and years I have benefited from advice, mentorship and investments. Without the generous help of many experienced entrepreneurs and business angels we would have not succeeded in  following my passion and starting Casacanda. Over the past years my co-Founders Sascha, Christian and I learned plenty when it comes to Business Intelligence, Marketing, Mobile, Social Commerce, Internationalizing - and we decided that it's about time to give back and support young and promising entrepreneurs with exciting ideas.

 

 Wishing you all a great start into 2013 and may your ambitions be high and come true.

 

 

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