Optimization increases lifetime value of travel deal seekers
Secret Escapes doubled mobile signup rate while optimizing customer acquisition
As a high-growth business in the extremely competitive online travel market, Secret Escapes cannot afford to make changes to any of their digital properties that might throw off this momentum. That’s why Secret Escapes runs all app and website changes—no matter how small—as Optimizely experiments first before rolling them out live.
“Virtually no change will go live on the website just like that. Everything is tested,” Sebastian Fallert, the company’s UK General Manager, said.
As a result of Optimizely experiments, Secret Escapes has been able to:
- Generate positive ROI from paid mobile marketing
- Increase purchase conversion rates
- Increase new user signups by personalizing PPC landing pages to keywords
- Continuously measure the impact of new app and web changes
Experiment: The new user mobile app onboarding flow
Before the Secret Escapes team first released their mobile app, they had a very important question to answer that faces many mobile app developers: should the app require users to sign up in order to view travel deals?
They had differing opinions on this question. On one hand, they thought a mandatory signup gate would create an exclusive community of registered users, which pleased the hotel partners offering highly discounted deals through the app. Advice from other businesses with similar models said an open app was the better option, and that mandating signup would cause signup rates to plummet and users to submit negative app reviews.
The impact of a mandatory gate on customer lifetime value was also a consideration. Secret Escapes needed to achieve a specific signup rate in order to break even on the acquisition cost of a new user. If mandating a gate lowered the signup rate, the average lifetime value of their mobile customers would also decline. “So we said, let’s do what we always do when we can’t decide: Let’s test it,” Fallert said. The product team used Optimizely’s iOS SDK to create and test two different mobile onboarding experiences concurrently. One experience allowed new users to skip or close the signup screen; in the second experience, signup was required, no skip button at all. With the experiment running, the team released the initial version of Secret Escapes to the App Store
Results and business impact
Contrary to what the team expected, a mandatory signup gate was the more optimal experience. It more than doubled the signup rate and did not lead to negative reviews or comments.
This experiment also revealed a pivotal discovery about Secret Escapes’ marketing funnel efficiency. Making signup mandatory justified the cost of mobile ad spend for acquisition by increasing the average lifetime value of each user. In other words, the LTV:CAC ratio was positive: all of the money spent to acquire the user will be matched or exceeded by what Secret Escapes receives from that user.
“If the skip button was part of the onboarding flow, we would not be able to do paid marketing on mobile. It would be very inefficient for us,” Fallert said. “We can acquire valuable users at attractive CPLs, which we are confident are going to be profitable after our targeted window—and that’s kind of a biggie.”
With the data from this test on the first-time user experience and their understanding of lifetime value for each customer, Secret Escapes can make smarter decisions about their advertising spend. They know exactly the amount of money they’re prepared to pay for a new user if they want a full return on investment.
Continuing to measure new experiences
At any time, Secret Escapes has around ten experiments running across their websites and apps. They hold a weekly meeting to review the testing calendar and queue of test ideas that is open to anyone across the organization. Each test is prioritized based on urgency and potential business lift.
Upcoming tests, Fallert said, will focus on the purchase conversion funnel to answer questions like: How much information do you need to disclose in each step of the funnel? Is percent discount more effective than absolute discount price? Do you show prices at all? The team previously tested all of these questions on the website but will now try on mobile “because it might be different.”
Question conventional wisdom
Assumptions should be tested. What works well for many other apps, websites or peers in your industry may not work best for you and your visitors or users.
Focus on acquisition metrics
The cost to acquire a customer can have a dramatic impact on the profitability of your business. By making customer acquisition more efficient, the health of your key business metrics will improve. Landing pages, sign-up flows, and new user experiences are key points to optimize.