How Big is Your Paid Ads Churn Problem?
Paid ads are a cost-effective way to reach your audience, increase traffic to your membership site, and drive your leads to convert.?
But, your pay-per-click (PPC) strategy can also lead to a high churn rate for your membership. Even though it can feel like you’re earning more money, your customer retention goes down.
Let’s dive into why it happens and how to solve it!
First, we need to look at your PPC churn rate.
Your PPC churn rate is the rate at which your paid ads audience converts, and then churns within a short period of time.
If your churn rate is too high, you end up paying more to acquire your new members than what they actually pay you throughout the duration of their membership.?
A healthy CAC-to-LTV ratio for a membership business is a 2-to-1 return, meaning that for every $1 you spend on paid ads, you should be generating $2 in revenue directly from that paid ad.?
If your ratio is lower than this, you need to take a look at the amount of churn coming from your paid ads conversions.
How do you work out your PPC churn rate? By using this formula:
(Total number of PPC-converted members who churned / Total number of PPC-converted members) x 100
This figure is something you need to prioritize above the other metrics that you or your marketing team are using to gauge the success of your campaigns.
Those metrics, like…
…are still important, but your PPC churn rate will always have the biggest impact on your revenue.
Let’s look at the solution.?
Getting the Sign-Up to Stick: The PPC Churn Solution
Like every business owner, you want to balance a high conversion rate and a low churn rate.
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The way to achieve this through your paid ads is to target your different audience segments with the right offer - tailored to their levels of intent - and then introduce friction.
‘Friction’ simply means that you’re adding more steps than necessary between your customer clicking on your paid ad, and them converting.?
It sounds counterintuitive. Surely if you make the checkout process as streamlined as possible, it would lead to more conversions?
It would. But you’ll be converting the wrong audience who are at a high churn risk.
By introducing friction into the process, you’re essentially qualifying your new leads by weeding out the impulse buyers who only stick around for a short period of time.
Depending on how you've set up your paid ads, you could have many different audience groups that you're targeting.
But, from a zoomed-out perspective, these will all fall into one of 2 broad audience segments:
1. Your low-intent audience.
Your PPC goal for this audience is to build awareness about - and demand for - your membership, without forcing them into a quick conversion.
An effective way to do this is to run a PPC campaign that directs your low-intent audience to a lead magnet of some kind.?
You can then use this to capture your leads’ information and enter them into your marketing funnel. From there, you can deliver engaging and educational content to your leads, slowly nurturing them to go from low intent to high intent.?
2. Your high-intent audience.?
Your PPC goal for this audience is to convert them into paying members.
A great way to do this with your paid ads is to reach these leads with a retargeting campaign.?
You can add pixel tracking to your high-intent website pages (like your pricing page and sign-up page), and then reach these targeted, high-intent leads with a paid ads campaign that brings them to a conversion-optimized landing page.
The biggest game changer for your PPC campaigns is to break down your different audience segments and assign specific marketing goals to each one, and then introduce friction into their conversion process.
Your marketing goal for your low-intent leads will be to build brand awareness and nurture them into high-intent leads.?
Your marketing goal for your high-intent leads will be to convert them into paying members.