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<Video
url="https://www.youtube.com/embed/1yvQSkCp66E?si=Skk-SLwn25QKnpOM"
/>

Imagine this: users open your app and find exactly what they're looking for. They keep coming back for more. That's the power of personalization — it creates a unique experience for each customer.

Sounds great, but how do you make it happen without a huge team? The answer is simple: start by personalizing your communications.

In this article, we'll explore how to personalize mobile apps and effectively engage users.


<Img
img="/uploads/spotify_offers_personalized_392d4fb573.jpg"
alt="Spotify offers personalized weekly playlists"
src="Spotify offers personalized weekly playlists, carefully crafted to match individual user preferences. Source: flightdigital.co.nz"
/>

## What is App Personalization?

Personalization means tailoring the app's functionality to each individual user. It's based on data about user behavior, preferences, and needs.

There are many ways to implement it: from [**personalized push notifications**](https://altcraft.com/blog/mobile-marketing-101-push-notifications) and welcome screens to adapting the app's content and features for each specific user.

## Why You Need Mobile App Personalization 

Thanks to personalization, you create a truly engaging experience for each individual. Here's why it's beneficial:

- **Increased engagement**. By offering what the user truly needs, you make your app indispensable.
 
- **Higher conversions**. Targeted messages and offers encourage people to make more purchases.

- **Reduced user churn**. Increased loyalty means fewer people are likely to leave.

## How Personalization Works

There are many ways to personalize. They can be divided into two main categories:

- The first is **user experience personalization**, where the app adapts its functions to a specific person. For example, a fitness app provides training programs tailored to the user's needs. In this case, the person specifies their fitness goals themselves.

- The second is **contextual personalization**. Here, the app analyzes user actions in real time. *For example, it suggests products based on the user's location, or recommends additional purchases, taking into account previous orders. In other words, the app interacts with each user individually, taking into account their specific situation.*

Combining these two approaches unlocks a vast array of experimental possibilities. You can create a comprehensive, personalized user experience for your application. 

For content-based applications, display the most relevant content directly on the home screen. In an online store, allow users to save their favorite products. Then, leverage this data to send [**personalized messages**](https://altcraft.com/glossary/personalization-what-it-is-and-why-personalized-marketing-matters).

<Img
img="/uploads/amazon_app_9a884e7193.jpg"
alt="Amazon app"
src="For example, in the Amazon app, you can add items to a list"
/>

## How to Personalize Mobile Apps 

Let's explore some effective strategies for tailoring mobile apps to individual users. 

### Segment Users Based on Behavior 

This segmentation is based on analyzing user data, including their in-app actions (such as purchases made) and preferences (like music listened to). This divides users into groups with similar behaviors and tailors content based on their actions and interests.

<Img
img="/uploads/kindles_personalization_e8de46a88d.jpg"
alt="Personalization of books"
src="Kindle’s personalization"
/>

**Create more** [**detailed segments**](https://altcraft.com/help-center/manage-customer-database/database-segmentation-for-email-newslettering). Once you've gathered enough customer data, group users based on multiple conditions and usage patterns. For instance, segment people who:

- Have made at least one purchase in the last month; 

- Haven't opened the app for more than five days. 

Then re-engage them with a push notification offering a discount on their next purchase.

**Classify app users by engagement level.** For example, you can identify segments with the highest potential value: "gold" customers, "silver," and "bronze." "Gold" consumers can be offered more loyalty programs and discounts.

###Communicate with customers across multiple channels 

Utilize various communication channels for maximum impact. For instance, send personalized messages via push notifications, email, SMS, or [**within the app itself**](https://altcraft.com/blog/in-app-advertising-what-it-is)

<Note> 
To maximize the effectiveness of omnichannel marketing, try Altrcfat — a CDP platform that ensures high-quality customer interactions across various channels. 
</Note>

**Utilize alternative communication methods if a customer doesn't open your message.** This way, you'll reach customers through the channels they interact with most frequently. Imagine users who don't open your push notifications. In this case, send them a message via email or SMS. But, of course, avoid spamming.

You can also combine channels: for example, you send a user a push, they click on it, and they're taken to the app where an in-app message with details awaits them.

###Personalize Your Push Notifications

Push notifications are a great way to engage and retain users, but generic messages often get ignored. Personalized notifications, on the other hand, are four times more likely to be noticed, [**according to Leanplum**](https://www.leanplum.com/glossary/android-push-notifications/).

For example, instead of sending a message like "You have items in your cart. Please buy them," you send a personalized push: "(Customer's Name), you left a Hawaiian pizza in your cart!"

<Img
img="/uploads/push_notification_from_duolingo_c10e53f91c.jpg"
alt="Creative push notification from Duolingo"
src="An example of a creative push notification from Duolingo — the character tells you how long your streak is"
/>

### Personalize In-App Messages

In-app messages are a great way to communicate with customers while they're actively using your product. Here are a few helpful tips:

- Show messages at the right time. For example, send an offer to place an order to a user who has opened the app for the second time this week.

- Segment users for different in-app messages. For instance, target users based on their activity, experience, preferences, and previous actions.

###Ensure Messages and App Content Align Seamlessly

Messages and the overall user experience should complement each other. If they're inconsistent, users are likely to get confused. 

Highlight valuable features in your notifications that users might miss. A good approach is to directly link users to the relevant section so they don't have to search for it themselves.

Encourage users to take specific actions, such as using certain features or placing an order. For example, in your food delivery app, recommend a particular restaurant or dish based on their past orders and preferences.

###Leverage Location-Based Personalization 

This type of personalization is a powerful way to boost engagement. It's particularly beneficial in industries like travel, food delivery, and retail.

###Send Messages at the Right Time 

Choosing the optimal time and frequency for sending messages is crucial. Sending notifications at the right moment significantly increases their effectiveness. Manual scheduling isn't the most efficient approach — it's better to utilize self-learning algorithms like those found in Altcraft Platform. The ML module will determine the best time to send push notifications.

### Utilize A/B Testing 

Through A/B testing, you can [**experiment with various elements**](https://altcraft.com/features/mvt) such as sending times, design, text, calls to action, and links. This will help you determine which messages resonate best with different users.

## Levels and Types of Personalization 

Personalized marketing doesn't always require a highly individualized approach to each user. More general methods can also be used. Let's learn more about the levels of personalization below.

### Promotions for Everyone 

This is the most common type. These are promotions designed for a wide range of consumers and cover all products. There's no personalization here, and no special technologies are required. Simple mass distribution of discount coupons is all that's needed.

<Img
img="/uploads/promotions_for_everyone_37dc29504f.jpg"
alt="Promotions for Everyone"
/>

### Loyalty Program Promotions 

These offers are restricted to a specific manufacturer or a particular group of products. With this approach, you provide customers with special terms, such as bonus points, gifts, or simply discounts until a certain date.

### Targeted Offers
Promotions designed specifically for a particular segment of customers are called targeted offers. Customer segmentation is based on various criteria, including demographics, purchase history, and other factors.

### Personalized Offers

Here, you focus on narrower audience segments. 

This highly popular approach in modern mobile marketing involves dividing users into groups based on various criteria. Then, the most relevant offers are selected for each of these segments. For instance, instead of sending bonus points to the entire audience, you could limit them to customers who recently celebrated their birthdays.

### Tailored Offers

The pinnacle of personalization is programs created specifically for an individual customer, taking into account their personal information and interaction history. Prime examples include automatically generated playlists based on a user's musical preferences.

### Types of Personalization

- Personalization for improved usability: Here, you suggest to the customer the nearest store or offer to repeat an order.

- Reminders: Here, you can inform the user about a discount on a product in their cart.

- Motivation: You can send the user a message encouraging them to continue their lessons ("You haven't studied Spanish for 5 days") or return to listening to an album.

##Challenges of Personalization

### Lack of Suitable Tools

Many retail companies consider data collection and processing to be the primary challenge in personalizing the customer experience. This is often due to a lack of resources for implementing and maintaining the necessary technologies.

###Data Errors

Personalization in mobile apps is based on user information. The more accurate this data, the better the app can adapt to each customer. However, if the information is incorrect or outdated, it can ruin the user experience. For example, if a person mistakenly clicks on a product they don't need, and the app then recommends similar products, it will cause a negative reaction. Give users the ability to opt out of irrelevant suggestions — for example, by allowing them to remove items from recommendations using a special button.

<Img
img="/uploads/aliexpress_9ad5da105a.jpg"
alt="The AliExpress feed"
src="After accidentally clicking on a fishing product, the AliExpress feed was flooded with fishing gear recommendations"
/>

### Data Security Challenges 

Many people are willing to share their information in exchange for personalized offers. [**About half of users**](https://www.blog.udonis.co/mobile-marketing/mobile-apps/mobile-app-personalization) don't mind if a brand uses their purchase history.

However, it's important to handle user privacy with care. Be as transparent as possible about data collection and usage. Avoid [**data breaches**](https://altcraft.com/blog/how-to-respond-to-data-breaches).

## Conclusion 

Personalization is an integral part of a successful mobile application. With personalization, you create a product that precisely meets the customer's needs and makes interacting with the app more enjoyable.

However, it's important to remember that effective personalization is impossible without respecting user privacy. Only a balance between a personalized approach and protecting personal data will help the app gain trust and popularity.

In this article, we will analyze how personalization works, as well as how to personalize mobile applications and effectively engage users.

what-is-mobile-app-personalization.png

About how to personalize mobile apps and effectively engage users.

What Is Mobile App Personalization and How to Use It

Mobile App Personalization: How to Use It

<Video
url="https://www.youtube.com/embed/KoB1iuxODE8?si=gvegnrGqBNJ9RmNa"
/>

The effectiveness of mobile applications and online services is closely tied to user activity. If people are logging in and using the service, it indicates that the developers' idea is successful and will generate revenue. It is important to track user behavior and conduct analytics to understand the problems and growth areas of the product.

This issue is addressed by product metrics measuring activity over a day (DAU), a week (WAU), and a month (MAU). The time tracking interval is chosen depending on the type of application and the tasks it solves. DAU, WAU, and MAU metrics reflect how popular the product and individual solutions are.

In this article, we will discuss why it is important to track how many users remain active over different time intervals. We will explain the correct calculation of results and ways to influence them.

## DAU metric

The DAU indicator denotes how many active users logged in and/or performed an action in the application in one day (Daily Active Users). Only unique visitors per day are counted. If one person opened the product multiple times, only the first entry is considered.

*Example:*
*300 people downloaded an app to keep a diary. On the second day, 150 of them logged in. Therefore, DAU = 150. Even though some used the app multiple times, only the first interaction is counted.*

### When to apply the DAU metric

Counting active users per day is suitable when the application or service is designed for daily interaction: calendars, planners, habit trackers, games, music, and so on. 
## WAU metric


The WAU indicator reflects the product's weekly active users (Weekly Active Users). Similar to the daily activity metric, only unique visits are counted, but WAU is not the sum of DAU over seven days.

*Example:*
*A banking app was installed by 200 people, and 70 of them logged in at least once during the week. Therefore, WAU is 70.*

### When to apply the WAU metric

This metric is relevant for services/apps intended for regular use, but not necessarily daily. These include health trackers, delivery services, messengers, financial tools, and others.

## MAU metric

The MAU indicator counts users who accessed the product at least once a month (Monthly Active Users). This metric is calculated separately and is not the sum of DAU or WAU.

*Example:*
*A flight booking app was downloaded by 1000 people. Within thirty days, 300 users logged in once, and another 150 logged in three or more times. However, for MAU, only the first login is counted, so the metric is 450.*

### When to apply the MAU metric

MAU is relevant for platforms that do not require daily or even weekly usage. These include services for booking travel, paying taxes, utilities, marketplaces, and so on.

## How to accurately calculate MAU, WAU, DAU

While product metrics do not require complex formulas, there are nuances in their calculation that should be considered.

**Define active users in advance.** It’s essential to specify who counts as an active user. Simply opening an app may not indicate effectiveness, especially in services where specific actions matter. For instance, a user might click on a marketplace app and immediately exit. In such cases, the activity should be defined as viewing products, adding items to the cart, or making a purchase.

**Determine the appropriate time Interval.** Choose the right time interval to track activity. Daily DAU metrics are not relevant for services used infrequently and might incorrectly suggest inefficiency. For example, it would be unreasonable to expect users to log into a fitness club app every day if it mainly functions for class bookings, as few people attend daily workouts.

**Consider external factors in calculations.** Account for external influences when calculating metrics. Marketing campaigns aimed at attracting new users can temporarily boost MAU, WAU, and DAU, which might drop after the campaign ends. This doesn’t necessarily indicate a decline in service quality. News events can also impact user activity, such as reports of widespread food poisoning potentially reducing orders through food delivery apps.

[**Segment your audience.**](https://altcraft.com/glossary/market-segmentation-what-it-is-its-types-and-main-stages) Understanding what attracts new users versus long-term users is crucial. Their needs may differ significantly. Additionally, segment users by time zones to accurately track daily activity (especially for DAU), by devices, and by payment types (one-time purchases, subscriptions, etc.).


## Why calculate MAU, WAU, DAU

These metrics are crucial for understanding the real popularity of a service or application. The number of downloads on the marketplace alone doesn't provide a complete picture, as users might not even open the product after downloading it.

Therefore, DAU, WAU, and MAU are calculated to:

**Monitor the proper functioning of the application/service.** Reduced activity can sometimes be linked to system glitches and errors. Tracking these metrics allows for quick detection and resolution of such issues.

**Evaluate marketing communications and advertising.** Tracking these metrics helps assess how well marketing efforts attract [**the target audience**](https://altcraft.com/glossary/target-audience-why-to-define-it-how-to-classify-and-segment-it), rather than just random users. It also helps measure the effectiveness of specific campaigns aimed at increasing activity and engagement, which is vital for planning future budgets and advertising strategies.

**Test new features.** User activity metrics reveal whether updates are relevant. They help identify which features should be improved or removed to enhance user experience.

**Attract investments.** Stable and growing user activity demonstrates the product's success. For investors, this is a strong incentive to invest, as it indicates a high likelihood of profitability and return on investment.

**Stay relevant in a competitive environment.** Tracking daily, weekly, and monthly activity metrics, and comparing them with competitors, highlights the need for changes or improvements to well-performing features.

## How to improve DAU, WAU, and MAU

Metrics are not static; they are influenced by various factors. Therefore, creators of digital products can adjust these metrics through marketing tools and technical improvements.

Key factors for improving metrics:

**User-friendly interface and attractive design.** Your product should stand out on the user's screen and be intuitively understandable. Complex action scenarios that require a lot of time will not motivate users to return and stay active.

<Img
img="/uploads/attractive_interface_of_netflix_home_page_df0b22d410.png"
alt="Example of attractive interface of Netflix home page"
src="Attractive interface of Netflix home page"
/>

**Stable product performance.** Constant errors, crashes, and slow customer support responses will reduce user activity as they visit applications/services less frequently. Therefore, it is essential to ensure everything works correctly, respond quickly, and resolve issues promptly.

**Content diversity and personalization.** In today's market, with numerous offerings, it's crucial to study user interests in detail, monitor their changes, and adapt accordingly. Don't be afraid to be creative with your content and analyze audience preferences to make precise proposals. This way, users will engage with your products more often.

<Note>
To learn more about content personalization, read the article [**Personalization: What It Is and Why Personalized Marketing Matters**](https://altcraft.com/glossary/personalization-what-it-is-and-why-personalized-marketing-matters).
</Note>

An effective way to diversify content is by introducing gamification elements and a system to reward user activity. 

**Consistent communication with the audience through push and email notifications.** Keep users informed about promotions, discounts, new features, and interactive events in your application or service. Continuing to engage with users within the app is also crucial. Therefore, onboarding and a well-structured communication system are necessary for ongoing interaction.

<Img
img="/uploads/email_promotion_from_sephora_1faa5a73ff.jpg"
alt="Example of email promotion from Sephora beauty store"
src="Email promotion from Sephora beauty store"
/>


**Conduct analytics and respond to user feedback.** Listen to customer reviews to continuously improve your product. Conduct audience preference research, such as custdev, A/B testing, and other methods.

It's important to assess the effectiveness of your service or application from various angles, not just by focusing on WAU, MAU, and DAU. Typically, additional metrics are considered, such as the Sticky Factor, LTV (Lifetime Value, the total revenue from a customer over their lifetime), conversion rates, CAC (Customer Acquisition Cost), and others.

## Summary

MAU, WAU, and DAU are metrics that measure user activity over different time periods: thirty or thirty-one days, seven days, and one day. They are used to assess the popularity of an app or online service, evaluate marketing effectiveness, gauge the impact of new features, and attract investment.

To calculate these metrics, it’s important to define what constitutes user activity, choose the right tracking period (day, week, month), consider external factors, and segment the audience.

To increase MAU, WAU, and DAU, strategies such as targeted messaging, personalization, engaging content, and continuous interface improvements, along with ongoing analytics, are employed.

MAU, WAU, and DAU track user activity to gauge app success. Boost them with targeted messaging, personalization, and engaging content.

metrics-mau-wau-dau.png

About why to track how many users remain active at different time intervals, as well as about the correct calculation of results and ways to influence them.

MAU, WAU, DAU: When to Apply & How to Improve These Metrics

Metrics MAU, WAU, DAU: When to Apply and How to Improve

<Video
url="https://www.youtube.com/embed/J3hjHssSZ1A?si=M-Cpm4tBjpXY98fX"
/>

## What is ROMI?

**ROMI, or Return on Marketing Investment**, is a metric used to evaluate the effectiveness and profitability of marketing campaigns or activities.

It shows whether the investments generate revenue. The uniqueness of ROMI lies in its focus specifically on marketing investments, not on general investments.

The formula for calculating ROMI varies depending on the specific conditions and goals of the campaign. Typically, ROMI is calculated as follows: first, subtract the marketing costs from the revenue generated, and then divide this result by the marketing costs. The metric is expressed as a percentage.

**ROMI formula:**

<Img
img="/uploads/romi_formula_d3107781a2.jpg"
alt="ROMI formula"
/>

**Example of calculating ROMI in practice:**
*ROMI = (revenue $200,000 from the marketing campaign – costs $50,000 on the marketing campaign) / costs $50,000 on the marketing campaign = 3 or 300%.*

## How ROMI helps advertising strategy

Knowing ROMI gives an understanding of whether you are incurring losses or making a profit compared to the amount spent on marketing. You can also calculate the earned amount.

Additionally, it helps in planning the marketing strategy for the next quarter. It is recommended to review the metric every three months.

<Img
img="/uploads/romi_in_marketing_strategy_planning_cc9d566731.jpg"
alt="ROMI in marketing strategy planning"
/>

It is essential to determine the effectiveness of current efforts and their impact on your company in the future. You can allocate time more wisely and increase the productivity of the marketing team. Or direct resources where they will be most productive.

Return on Marketing Investment is considered good if it is above 100%. This indicates that the money invested in marketing generates profit.

### Who should pay attention to ROMI

ROMI is a metric that various business stakeholders should pay attention to:

**1. Marketers.** They evaluate the effectiveness of campaigns and other marketing activities. This helps them understand if the chosen strategies are profitable, make data-driven decisions, and allocate resources wisely.

**2. Executives.** They determine the overall efficiency and profitability of the marketing department. With ROMI, they justify marketing budgets and identify the priorities of different activities. ROMI also shows the impact of various campaigns on the organization’s financial performance.

**3. Finance department.** They focus on ROMI to assess the profitability of marketing investments and how it aligns with the organization's financial goals. ROMI helps in proper budget allocation and tracking effectiveness.

**4. Business owners and leaders.** ROMI provides insights into how effective marketing efforts are in driving company profits. Through ROMI, they evaluate the overall strategy and determine investments in activities.

**5. Stakeholders and investors.** They need to understand the effectiveness of marketing campaigns as it impacts the financial performance and growth of the organization. Through ROMI, they assess the contribution of the marketing department to the company's profitability and market position.

## ROMI for short-term and long-term effectiveness

### Short-term effectiveness

It provides insight into how marketing campaigns and other initiatives instantly impact profit. By comparing the revenue from a specific campaign with its costs, marketers evaluate short-term profit and the effect of their efforts. This way, they analyze which campaigns bring quick results and adjust their strategies accordingly.

*For example, a company launches a short-term advertising campaign during the holiday season, spending $10,000 on ads. This brings in $30,000. The ROMI for this campaign is: ($30,000 - $10,000) / $10,000 = 2 or 200%. This means that for every dollar invested, the company earned $2 in profit in the short term.*

### Long-term effectiveness

By tracking the impact of ongoing investments over an extended period, marketers determine the success of long-term strategies aimed at increasing revenue and customer acquisition.

*For example, a company invests in brand positioning and customer retention programs throughout the year, spending a total of $500,000. By the end of the year, the company's revenue increased by $2 million. The ROMI for this long-term marketing strategy is: ($2,000,000 - $500,000) / $500,000 = 3 or 300%. This indicates that for every dollar invested, the company earned $3 in profit over the year.*

Considering ROMI for both short-term and long-term effectiveness, marketers gain a comprehensive understanding of the efficiency and profitability of their marketing activities.

## ROMI compared to other marketing metrics

ROMI provides valuable insights into the financial impact of marketing activities on company profits by calculating the return on marketing investments. However, it is important to consider other metrics to get a full picture of marketing effectiveness.

ROI, CAC, CPL, CLTV, and conversion rate—all these metrics offer additional perspectives on various aspects of marketing performance. By analyzing multiple metrics, marketers can make informed decisions, optimize strategies, and allocate resources efficiently.

Let’s compare ROMI with other marketing metrics, highlighting their unique features and how their combination helps assess marketing effectiveness.

### ROMI vs ROI

**ROMI (Return on Marketing Investment) and ROI (Return on Investment)** are interrelated metrics used to evaluate the financial performance of marketing efforts, but they differ in focus:

- ROI is a general financial metric that measures the total return generated from any investment, including marketing. 

- ROMI calculates the return specifically on marketing investments.

<Note>
How to calculate ROI? Why is this metric important for businesses? Read the article "ROI: What It Is and Who Benefits from It."
</Note>

### ROMI vs ROAS

**ROAS (Return on Advertising Spend) and ROMI (Return on Marketing Investment)** are metrics for measuring the effectiveness of marketing efforts, but they focus on different aspects of performance.

- ROAS is a metric used in online advertising to evaluate the revenue generated from advertising investments. It measures the efficiency of specific advertising campaigns by calculating the revenue per dollar spent. 

- ROMI is a broader metric that encompasses all marketing investments, not just advertising spend.

<Note>
For more details on the differences between ROI, ROMI, and ROAS, read the article [**"What is the Difference Between ROI, ROMI and ROAS."**](https://altcraft.com/blog/roi-romi-roas-difference)
</Note>

## Advanced approaches to ROMI

Understanding ROMI leads to creating a more sophisticated strategy than relying solely on ROAS and ROI metrics.

It's important to know that not all investments are equal. Sometimes, it's essential to understand how different marketing goals perform in terms of profitability.

In one of his books, Rex Briggs introduced the term ROMO (Return on Marketing Objectives) to encourage marketers to use different metrics for various tasks. Not all of these tasks are profit-related; some focus on brand awareness or perception.

It is possible to break down ROMI calculations by campaign or by where these campaigns are in [**the sales funnel**](https://altcraft.com/blog/what-is-sales-funnel) (top-of-funnel activities like social media tags or organic website traffic; bottom-of-funnel activities like sales and conversions).

## Frequently Asked Questions: ROMI

### 1. Why is ROMI becoming a popular metric among marketers?


ROMI measures marketing effectiveness comprehensively, enabling better resource allocation and budget optimization. It requires justifying marketing expenditures and is easily calculated using digital tools.

### 2. How often should ROMI be analyzed?

The frequency of ROMI analysis depends on various factors: goals, business nature, and campaign duration.

For short-term activities, ROMI can be analyzed weekly or monthly to capture fleeting trends and adjust strategies promptly.

For longer-term marketing efforts, quarterly or annual ROMI analysis is suitable.

### 3. In which industries is ROMI more important?

ROMI is valuable across different industries and sectors. For example:

1. Retail companies often invest significantly in marketing to attract traffic, increase sales, and strengthen [**customer loyalty**](https://altcraft.com/blog/customer-loyalty). 

2. Consumer packaged goods (CPG) companies heavily rely on marketing to promote their products, enhance brand popularity, and boost sales. 

3. Telecommunications companies invest substantial resources in marketing to acquire new customers, retain existing ones, and promote services. 

4. In the financial sector, marketing plays a crucial role in acquiring new clients, building trust, and promoting various services. 

5. Technology-related companies often allocate substantial funds to marketing efforts to build brand awareness, [**generate leads**](https://altcraft.com/glossary/what-is-lead-generation), and advertise products.

### 4. How to improve ROMI?

Improving return on marketing investment requires strategic planning, data analysis, and continuous optimization. Here are several strategies to help improve your ROMI:

**1. Set specific and measurable goals.** This focuses efforts on priorities and tracks progress effectively.

**2. Analyze data.** Monitoring [**key performance indicators (KPIs)**](https://altcraft.com/glossary/key-performance-indicators-what-they-are-and-how-to-use-them), conversion rates, customer lifetime value (CLV), and cost per acquisition identifies areas for improvement.

**3. Segment your target audience.** Analyzing and segmenting the target audience tailors advertising messages and strategies to specific customer groups.

**4. Test and optimize your campaigns.** Conducting A/B testing adjusts messages and enhances communication channels.

**5. Invest in marketing analytics.** Utilize tools and platforms for analytics to delve deeper into data and optimize your efforts.

**6. Foster collaboration between marketing and finance departments.** Improve communication and cooperation between your teams.

**7. Adjust marketing spend.** Regularly analyze the results of various marketing channels and campaigns to determine where your advertising investments yield the highest ROMI.

**8. Focus on customer retention.** Enhance customer retention processes to maximize the value of your initial customer acquisition investments and thereby improve ROMI.


### 5. Can ROMI be calculated for both online and offline marketing campaigns?

Yes, it can. Whether it’s an online campaign aimed at driving website traffic and conversions, or an offline campaign targeting a local audience through billboards, ROMI shows the return on marketing investments.

Tracking ROMI for both online and offline campaigns provides insight into which channels and strategies deliver the highest return on investment. This information helps optimize marketing budgets, make data-driven decisions, and allocate resources effectively to maximize overall ROI.

### 6. How does seasonality affect ROMI?

Seasonality has a significant impact on ROMI. Consumer behavior often changes depending on the time of year due to various factors such as holidays, weather, and cultural events.

Companies should consider the following factors:

**1. Consumer demand.** Aligning marketing efforts with [**peak seasons**](https://altcraft.com/blog/seasonal-marketing) can capture increased consumer demand.

**2. Marketing planning.** Marketers plan campaigns and allocate resources effectively by identifying key events that influence customer behavior.

**3. Budget allocation.** Adjusting marketing spend according to peak seasons and aligning budgets accordingly optimizes ROMI during high-demand periods.

**4. Campaign timing.** Considering seasonality, marketers plan and execute campaigns during periods of highest interest and engagement from customers.

**5. Channel selection.** Different seasons may require specific channels. Companies choose the appropriate communication methods for particular seasonal campaigns by analyzing past customer behavior.


Source: [Ignite Visibility](https://ignitevisibility.com/romi-vs-roas-marketing-metric/)

ROMI measures the profitability of marketing investments, guiding strategy optimization, budget allocation, and resource distribution for maximum ROI.

data-analysis-romi.png

About what ROMI means in advertising and how to calculate it correctly.

ROMI, What It Is, Its Impact on Marketing Strategy

Data Analysis: ROMI and Its Impact on Strategy

<Video
url="https://www.youtube.com/embed/o85-BdJ6V9Y?si=ITsycfx7D2wvK22p"
/>

In 2013, Snapchat introduced a new format for publishing content — stories. It was uncertain at the time if this innovation would become popular. However, ten years later, stories remain one of the top marketing tools. Users of Instagram* have appreciated this "quick" content format. Stories were introduced to Instagram* in 2016 and remain relevant to this day.

Users, experts who conduct personal marketing, and brands all share their stories. There are even dedicated people — story makers — responsible for creating stories. According to Instagram* statistics, [**85%**](https://wifitalents.com/statistic/instagram-stories/) of users discover new products and services through stories. Therefore, a company's online marketing strategy must include this direction.

In this article, we will explain what stories are, their types, how they work, and why businesses need them.

## Stories: what they are and why they're needed

**Stories** are short vertical content formats (up to a few seconds) with horizontal scrolling options, published for a limited time (usually 24 hours). Depending on the platform, you can post images, videos, add text, music, links, hashtags, stickers, masks, and even draw. Stories are broadcast only to followers.

There are also dedicated apps for creating stories with extended features, offering a variety of fonts, templates, and other tools. The idea behind stories is to create easy and native content, where perfection isn't mandatory. Aesthetic pictures and videos are more suited for posts that don't disappear from the feed — this is an unspoken rule of social media.

Stories can be found on Instagram*, VK, and other mobile apps, messengers, and even websites. The themes and formats of stories are similar to other publications: from direct advertising, case studies, and tips to polls and reposts of posts and videos.

### Advantages of online stories for business

**Increased engagement.** Stories offer a quick and easy way to consume content, equipped with tools for marketing communication with users. Brands engage their audience through [**storytelling**](https://altcraft.com/blog/let-the-client-feel-like-a-hero-how-storytelling-works) and content that evokes emotions, conduct surveys, collect feedback, and other interactions. Stories on a website also increase the time a user spends on a web page, which positively impacts search engine ranking.

**Conveying information to customers.** Through stories, companies share information about new promotions and products, events, and news. This format does not overwhelm users and, due to the FOMO effect (fear of missing out), encourages them to watch stories repeatedly.

**Brand awareness growth.** Although stories are primarily seen by followers (with no external reach), this type of content also expands the brand's audience. Advertising in stories by bloggers and on other platforms remains a popular promotion tool. Interestingly, the cost of integration into stories is often lower than in posts or video publications.

Social media stories feature tagging tools that users love to use for brands. For instance, when they visit a restaurant and then share about it on their page. Encouraging the audience to create such stories and then reposting their stories increases brand awareness and provides free user-generated content.

**The effect of personalization.** Stories seemingly reduce the distance between the brand and the customer due to their native format. Companies show their internal life and communicate with users in a live format, creating a sense of personal connection. Personalization is a marketing trend that continues to gain momentum.

<Note>
How does personalization work? And why is it needed? Read the article "[**Personalization: What It Is and Why Personalized Marketing Matters**](https://altcraft.com/glossary/personalization-what-it-is-and-why-personalized-marketing-matters)"
</Note>

## Types of stories

Based on goals, there are several types of stories, which align with the types of other social media posts:

- **Informative and educational** — communicate brand news, new products, changes, and product features. 

- **Selling** — lead to conversion: the purchase of a product or service. 

- **Engaging** — motivate the user to interact with the brand's content. 

- **Entertaining** — lift the audience's mood, convey company values through humor, and tell about the product.


Based on formats, the following types of stories are distinguished:

**Images (usually with text).** Several photos can form an entire story or reveal one idea through cards. Sometimes it’s just text on a background without a picture.

**Video stories.** These are short clips (usually 15-30 seconds) that convey an idea on their own (e.g., announce a promotion) or form a sequence of several clips.

**Animated stories.** The functionality of many platforms allows adding moving stickers to images and videos in stories. Animation adds variety to the content.


## Rules for creating effective stories

Stories are more native content compared to other posts, and creating them doesn't take much time. However, to make the format effective, you should follow these rules:

1. **Create a unified style for your stories** that will be associated with your brand: think about colors, fonts, and the style of images. Avoid turning your storytelling into a "mess." 

2. **Keep your stories simple and clear.** Don’t overload them with text and philosophical themes that require thoughtful study of the content. 

3. **Don’t stretch a single thought across too many stories.** Users will get bored and might not finish watching. 

4. **Add variety.** Use different formats, not just one: images, videos, polls, etc. 

5. **Check the story** for spelling errors, design correctness, and afterwards, for the functionality of links and other tools before publishing. 

6. **Motivate users to interact** or take a specific action, rather than waiting for them to take the initiative themselves. 

7. **Create interesting plots** so that the audience watches your stories to the end. Use storytelling tools that engage viewers in the narrative.


## How to promote your products and services through stories

Bloggers particularly excel in selling through stories, using various scenarios for product presentations and calls to action. Brands also adapt their techniques and collaborate with influencers for integrations. There are no strict boundaries here; methods depend on the authors' creativity. However, some popular promotion types exist.

**Advertising.** The most straightforward and direct format where a product or service is sold without any storytelling. These are ad posts adapted for stories, featuring an offer, product benefits, and a CTA. It’s important to approach this creatively to stand out.

**Native advertising.** The product is mentioned in the context of a story where it plays a crucial role (solves a problem) or is casually mentioned. This format is very popular among bloggers for brand promotion. 

**Warm-ups.** A favorite format of bloggers. Unlike native advertising, this strategy is more extended. The product is usually introduced indirectly at first, mentioning it from various angles. For example, the problem is first highlighted. Suppose a blogger wants to lose weight and tries different methods: diet, home workouts, fitness centers, and then finds the right course (or creates their own). Warm-ups can last from several weeks to months, depending on the product.

**Building trust** is not as quick a promotion method as advertising, native integrations, and warm-ups. However, it is the established communication with the audience that turns followers into customers. Broadcasting your values, product advantages, and its worth leads to loyalty and sales.

## Stories on different platforms

### Instagram*

The concept of "stories" became popular thanks to this social network (although it was originally created by Snapchat). Instagram offers a wide range of features in its editor. You can use various fonts, draw, create polls, set timers, ask questions, participate in challenges, add animated stickers, include music, mention other users, use hashtags, and add links to other resources. You can choose to publish your stories for everyone or for a specific list of followers.

<Img
img="/uploads/example_of_instagram_stories_368ce1e533.jpg"
alt="Instagram stories"
src="Example of Instagram stories*"
/>

### VK

VK stories offer background templates, stickers, GIFs, a text editor, drawing tools, and the option to set the availability time for stories: one hour, 12, 24, or 48 hours. Music can be added from the catalog, and there are mentions, polls, and themed hashtags.

### Telegram

Stories on Telegram appeared relatively recently and are available to users and channels (but only if they receive enough boosts) from Telegram Premium subscribers. They can be posted for a duration of six to 48 hours. The built-in editor includes features for adding text, filters, stickers, reactions, drawing, and privacy settings.

 <Img
img="/uploads/example_of_stories_telegram_70a62e42ff.jpg"
alt="Telegram stories"
src="Example of stories in Telegram"
/>

### WhatsApp*

Stories on WhatsApp are called "Status" and disappear after 24 hours. Users can post photos, videos, GIFs, add text, and even voice messages. Reactions to stories are available, as well as the ability to choose the audience who can see them.
 
### Stories on apps and websites

Brands actively use the stories format not only on third-party platforms but also on their own. This way, they announce promotions, talk about products, and deliver useful information to users.

<Img
img="/uploads/news_announcements_via_stories_6324f6a9c3.jpg"
alt="News announcements via stories"
src="The famous news media Der Spiegel gives news announcements via stories"
/>

Also, stories here come personalized. 

<Img
img="/uploads/personalized_stories_79bb14e4fb.jpg"
alt="Example of personalized stories"
src="Personalized stories on apps"
/>

Interactive stories work in the apps. For example, polls are conducted or you are offered to add a product to your cart at once.

<Img
img="/uploads/onboarding_stories_51d8d83b9f.jpg"
alt="Onboarding stories"
/>

In another example, a customer is asked to evaluate his most recent purchase.

<Img
img="/uploads/stories_asking_for_feedback_f7aaedd0e4.jpg"
alt="Stories asking for feedback"
/>

Stories on websites serve the same function as they do on other platforms.

<Img
img="/uploads/stories_in_search_results_4adb2ae707.jpg"
alt="Stories in search results"
/>

## Summary

Stories are a vertical content format that disappears after a few hours or days. Stories in the form of images, videos, and text are supplemented with stickers, animations, links, interactive elements, and other features in platform editors. The functionality across different platforms is similar.

Stories are used in marketing to communicate with customers, increase engagement, enhance brand recognition, and even for personalization. They inform, entertain, sell, and motivate users to interact with the brand. Storytelling, direct and native advertising, and warm-ups work well here.

Today, stories are supported by Instagram* (owned by Meta, banned in Russia), VK, Telegram, and WhatsApp* messengers. Companies also add stories to their websites and apps.

*
*Products of Meta, recognized as an extremist organization in Russia.*

Stories are vital in marketing, boosting engagement, brand awareness & customer interaction. Effective on Instagram, Telegram, and VK with versatile features.

stories-how-to-use-this-tool.png

About what stories are used for in marketing, what types there are and how they are useful for business.

Stories: Advantages, Types & How to Use in Marketing

Stories: How to Use This Tool in Marketing

<Video
url="https://www.youtube.com/embed/o85-BdJ6V9Y?si=Uxt_Vh4IPqbQ5rRh"
/>

Promoting your business among the target audience is the foundation of any business's success. However, many companies overlook the most powerful and cost-effective marketing force—satisfied customers.

Loyal users, delighted with your products and services, recommend your brand to others and praise it on social media—this is called **organic brand promotion.** Let's explore why such promotion is an essential marketing strategy and learn how to create customer incentive programs that motivate people to share your brand with others.

<Img
img="/uploads/a_group_of_apple_users_on_reddit_0fca276609.jpg"
alt="A group of Apple users on Reddit"
src="A group of Apple users on Reddit. This brand has perhaps the largest community of supporters in the world"
/>

## What is organic promotion? 

Brand advocates are users who are so satisfied with your company that they are willing to advertise for you on their own. They can be anyone: your employees, customers, partners, suppliers, and even social media influencers.

Advocates share their positive experiences through reviews on your website and other platforms. They also promote you via word of mouth, mentions on social media, and blogs. All these reviews, photos, and comments are called user-generated content (UGC).

<Img
img="/uploads/ugc_mentioning_brand_name_0aaadb6558.jpg"
alt="UGC mentioning brand name"
src="UGC mentioning brand name"
/>

Organic brand promotion is more valuable than anything money can buy. User-generated content has substantial reach and exerts more influence than any ad campaign, SMM promotion, or even the efforts of your most experienced marketer. This way, you not only reduce advertising costs but also build strong and trustworthy relationships with customers through their content.

<Note>
**Interesting fact:** Buyers increasingly trust visual content created by other users. [**Recent studies**](https://www.powerreviews.com/research/ugc-visual-content-shopper-behavior-survey/) show that 60% of users look for photo and video reviews (visual UGC) before making a purchase.
</Note>

## How to gain advocates
Sometimes, people naturally become fans of a company. However, there are steps you can take to create a truly effective marketing strategy.

### 1. Understand what people value about you

To create a good marketing program, you need to understand what people like about your company. Most often, this is related to the quality of products or services, but excellent customer service and a personalized approach also play a big role.

Don’t guess what your customers want—just read the reviews. Look at what people are saying, both good and bad. Analyze the feedback and use the information to make your brand more visible on social media.

<Img
img="/uploads/an_example_of_a_positive_review_of_a_beauty_studio_8c8e1da162.jpg"
alt="An example of a positive review of a beauty studio"
src="An example of a positive review of a beauty studio that positively impacts the brand's reputation"
/>

### 2. Build relationships with customers

Developing strong, personalized connections with users is key to gaining brand support and boosting sales. According to the SaaSquatch report [**"The State of Referral Marketing,"**](https://info.saasquatch.com/rs/162-BJJ-156/images/StateOfReferralMarketing-SaaSquatch-V1.pdf) customers who come through referrals are 18% more loyal, have a 16% higher lifetime value, and spend 13.2% more than others.

In today's digital world, users identify with their favorite brands and want to be part of their story. To nurture these feelings, offer value and build trust through social media.

Building relationships between a brand and its customers is a two-way process that requires attention and thoughtful approach. This is the only way to maintain long-term interest. Be open with your users, but avoid aggressive selling.

The key here is to give more to your customers and ask less from them. Then, they will want to interact with you on their own initiative. Of course, building such relationships requires time and resources. Maintain constant contact with current and potential customers. It’s important to ensure that the necessary resources are available for relationship development and social media monitoring.

<Note>
**Tip:** To increase loyalty through SMM, create valuable content, respond to followers, and help them solve problems related to your product.
</Note>

<Img
img="/uploads/brand_responded_to_a_positive_customer_review_5323b4fb10.jpg"
alt="The brand responded to a positive customer review"
src="The brand responded to a positive customer review"
/>

### 3. Delight and surprise your clients, as well as those who are not yet familiar with your brand

Go beyond standard service. Provide unforgettable experiences that customers will want to share. Excellent service and pleasant surprises will strengthen customer loyalty, leading them to tell their friends about you. For example, reach out to some users and invite them to a special event. Identify influencers among your followers or turn loyal customers into true brand advocates.

<Note>
We discussed customer loyalty in detail in the article "[**Customer Loyalty: What Is It and How to Calculate It**](https://altcraft.com/blog/customer-loyalty)."
</Note>

Start by monitoring online reviews to find your company’s fans. Reward the most active fans by mentioning them, offering exclusive discounts, and bonuses. This will greatly strengthen the user’s connection to your brand. Remember, loyalty to a company is contagious, and quality relationships drive sales.


<Note>
**Tip:** Strengthen your presence on social media by sharing your company’s values, charitable projects, and ethical business practices. This shows people that you aim for more than just commercial goals.
</Note>

Support and encourage brand advocates. Increase their reach. Add "share" buttons to your content to make it easier for users to talk about your company.

### 4. Track the effectiveness of your brand promotion strategy

To understand the value of your campaigns, analyze the following:

- Who is talking about your brand?
- What are they telling their followers?
- Where are they most frequently sharing content?
- When are users most active?
- Why are they sharing your content and talking about your brand?

Monitor web traffic and conversion rates to identify which brand promotion campaigns yield the highest returns. Use this knowledge to refine your strategy and boost sales.

### 5. Don’t forget to thank brand advocates

Many companies have loyalty programs that reward customers for their spending. This is a good practice, but it doesn’t account for those who promote the brand. Consider a point system for specific actions: reviews, photos, event attendance, or referrals. Create a name for your promotion program that shows brand advocates they are part of an exclusive club. Give them the opportunity to accumulate points and advance to different levels with interesting privileges: mentions in the company blog, receiving [**branded merchandise**](https://altcraft.com/glossary/merch-what-it-is-and-how-brands-use-it), invitations to exclusive brand events, and discounts.

## Why your brand needs advocates

Organic brand promotion is valuable for its authenticity. While advertisements and marketing messages are often ignored, enthusiastic recommendations are usually taken seriously.

Such promotion benefits your business by:

- **Reaching audiences that you wouldn't be able to reach** through conventional methods due to budget or logistical constraints. For example, Adobe asked 900 of its employees to create and share content online, which helped them reach an additional 3 million people. 

- **Creating buzz around your brand.** Positive customer reviews generate interest and a desire to learn more about your company. The more people visit your website or store, the more potential customers you attract. Increased website traffic also positively impacts [**search engine rankings**](https://altcraft.com/glossary/seo-optimization-what-it-is-and-how-it-works), which in turn attracts new visitors. 

- **Drawing media attention.** When there is buzz around a brand, journalists take notice. Articles about your company, products, and services get published, boosting trust and significantly increasing brand recognition. 

- **Humanizing your brand.** When a potential customer hears about you from another user, a faceless company becomes something more relatable. This effect is amplified when brand advocates share stories about their experiences with you and how you solved their problems. It's even better if they mention specific employees they interacted with (if you have customer meetings) or post video reviews. 

- **Saving time and money.** The cost of organic promotion is relatively low. Yes, some initial time and financial investment is required to set up the program, but this is minimal compared to the benefits you'll gain. When your advocates take on a significant portion of your marketing, you can allocate resources to other areas.

## How to handle customer reviews


Publishing customer reviews is legal, but with some caveats. The format matters. Incorrect publication can lead to violations of several laws.

Below, we’ll discuss how to properly post customer feedback on social media or your website.

### How to post reviews correctly? 


To post customer reviews without legal issues, follow these guidelines:

- **Obtain the customer's consent to publish the review and use their full name** (or other information). If you want to post a review that includes a name and text, simply ask the user if they agree. You can also add consent for posting reviews in your terms of service. In this case, anyone who accepts the terms automatically gives permission to publish their feedback.

<Img
img="/uploads/brand_is_asking_permission_47dd15d8e6.jpg"
alt="Brand is asking permission in the comments"
src="Brand is asking permission in the comments to post this photo at his place"
/>

- **Before attaching a photo to a review, determine who owns it.** If the customer took the photo themselves, there are no issues. However, if the photo belongs to someone else, you must get permission from the original owner. This is important because a photo from a customer's personal account might be a professional shot. The owner of the photo would be someone else, and the person's consent in the photo is useless. You need to find the true rights holder and negotiate with them. The simplest and safest option is to take the customer’s photo yourself. 

- **Avoid posting fake reviews about your competitors.** Such actions often lead to lawsuits. Even if you know of poor service cases at competitors but are not their customer, it’s better to refrain from negative reviews. Posting fake positive reviews about your own brand is legal. However, such reviews are usually not very convincing. It’s better to rely on real feedback from actual users.

## Conclusion

A strategy for organic marketing involves building and maintaining relationships with users. Through two-way communication, they feel closer to the brand and are more willing to recommend you to their friends. Encouraging the most active supporters creates a snowball effect, bringing in even more loyal customers.

Organic marketing builds strong user relationships, encouraging active supporters to recommend your brand, creating a snowball effect of loyalty.

customer-motivation.png

About why natural promotion is an important marketing strategy, and we will also learn how to create customer incentive programs.

Customers Advertising Your Brand: How to Motivate Them

How to Motivate Customers to Advertise for You

<Video
url="https://www.youtube.com/embed/SaEo6Iian4E?si=8vOojkN4egDq8IWG"
/>

The goal of any business is not only to attract but also to retain customers. A loyal audience that consistently returns for repeat purchases, renews subscriptions in apps and services, provides companies with more stability, and saves advertising budgets.

Therefore, tracking user retention regularly is essential. In marketing, there is a metric called Retention Rate (RR). This metric considers the ratio of old and new customers over a specific period and indicates when a customer retention strategy needs adjustment.

In this article, you will learn what Retention Rate means, why it is used, how to calculate the customer retention rate, and how to increase RR.
## What is Retention Rate and why measure it

**Retention rate** is a customer retention metric that shows what percentage of people return and use a business's product again. This metric is especially popular in the IT sector, where users need to regularly log into applications and services to benefit their creators.

### Why calculate customer Retention Rate:

**Understand product effectiveness:** Determine how well your product actually solves customer problems so that they continue using it.

**Evaluate marketing and service efficiency:** Assess the effectiveness of marketing departments and the service level provided by the company. A low retention rate is a warning signal. Analyzing it will show which department is underperforming and why customers are not returning.

**Reduce marketing costs:** Retaining customers is cheaper than acquiring new ones, which usually involves multiple advertising campaigns. The retention rate metric shows how effectively your marketing works on existing customers.

**Increase company revenue:** The usefulness and convenience of your product enhance customer loyalty. Loyal customers not only return and respond to additional offers but also recommend your brand to others.

<Note>
In the article "[**Customer Loyalty: What Is It and How to Calculate It**](https://altcraft.com/blog/customer-loyalty)" we explained in detail why loyalty is important and which metrics are used to measure it.
</Note>

## How to calculate Retention Rate

To calculate the customer retention rate, you need the following data:

- **A.** The number of customers at the beginning of the selected calculation period. 

- **B.** New users during this time. 

- **C.** The number of people who continue to use your product at the end of the period.

The Retention Rate formula looks like this:

<Img
img="/uploads/calculate_retention_rate_9b1ea036d4.jpg"
alt="Calculate Retention Rate formula"
/>

The calculation period is chosen depending on the business sector and the product's characteristics. If the purchase cycle is quick, the Retention Rate is calculated more frequently. The usual calculation periods for this metric range from daily to yearly.

***Example RR Calculation #1:***

*At the beginning of the month, the interior design app had 5,679 users.
During the month, an additional 120 users joined. At the end of the month, 5,456 people were using the product.*

(5456 - 120) / 5679 * 100%

*RR = 93%*

***Example RR Calculation #2:***

*Over the year, 11,320 people made purchases in the online store, starting with 13,780 customers at the beginning of the year, and 2,600 new buyers during this period.*

(11320 - 2600) / 13780 * 100%

*RR = 63%*

It is also permissible to calculate the retention rate for separate cohorts of users to ensure proper segmentation and enhance [**the personalization of offers**](https://altcraft.com/glossary/personalization-what-it-is-and-why-personalized-marketing-matters).

## How to evaluate Retention Rate

There is no specific benchmark percentage for RR because each industry has its own figures, and customer acquisition and retention are done differently. Therefore, it is advisable to benchmark against market leaders you aspire to match when calculating your RR. It is important to consider successful cases.

*For example, a retention rate of 65% for a mobile app would be low, whereas it would be high for the retail sector, where* [***the average is 63%***](https://www.paddle.com/resources/industry-retention-rates).

Another way to find your benchmark for RR is by considering your own data from previous periods. By continuously tracking the rate, you will establish your internal ideal percentage. This method is also suitable when competitor RR information is not publicly available.

## Retention Rate and other metrics

Marketing is a system that should not be evaluated based on a single metric. To assess whether your strategy is working when launching campaigns for customer retention and loyalty enhancement, other metrics are also used.
 
<Table>
|**Metric**|**Description**|
| ------ | ------ | 
| **Churn rate** | The number of users (in %) who unsubscribed from emails or newsletters via messengers, SMS, Push and stopped using your service. That is, churn rate metric indicates how many people have stopped connecting with the brand through all communication channels. Churn is a normal process, because products sometimes lose relevance for customers. But it is important that this indicator is overlapped with new users. |
| **Lifetime value** | Profit from the customer over the entire time they have interacted with the company. A useful metric for personalization because over a long period of time with a customer, the brand gathers enough information about their needs, tastes and orders to make a customized offer. |
| **Redemption Rate** | Metric for evaluating the use of provided bonuses: discount coupons, points and so on. Needed to check the effectiveness of loyalty programs and marketing campaigns. |
| **Customer Satisfaction Index** | Measuring customer satisfaction with specific interactions with the company and product. It is checked, for example, to what extent users are satisfied with the quality of goods, variety of assortment, communication by phone with service, technical support, and so on. |
| **Repeat Customer Rate** | Indicates how many people out of all customers have returned for purchases two times or more. A high return rate indicates satisfaction with a product or service and its usefulness to users. |
| **Net Promoter Score** | A metric of user commitment to your company. Shows how willing customers are to buy again and recommend you to others. Users rate the brand on a given scale, and an overall coefficient is calculated for all the answers of the questionnaire. |
</Table>


## How to improve Retention Rate

To impact RR, it’s crucial to understand what user retention means for your company and what tools and methods are used. Then, choose the available strategies.

**Improve the product.** Increase its value for customers by adding new features, improving existing ones, fixing bugs, and so on. The faster and more effectively your product solves the customer’s problem, the more often they will want to return to it.

**Simplify product use.** Eliminate lengthy and confusing registrations, provide a simple [**onboarding process**](https://altcraft.com/glossary/why-do-you-need-onboarding), and ensure an intuitive interface to enhance the user experience.

**Launch marketing campaigns as retention methods.** Remind users about your product through email newsletters, push notifications, [**messages in messengers**](https://altcraft.com/blog/messenger-marketing), and SMS. Use special offers and promotions to encourage users to return to purchases and other target actions, with personalization being particularly effective. Providing bonuses for various activities, which also benefit your brand, can be useful for retention.

*For example, Nook Vibrant Kitchen, a plant-based meal delivery service, excels in ecommerce email marketing with their loyalty program explainer email. It outlines earning and redeeming points, referrals, and the bottle return program, ending with a join call. This thorough guide helps eliminate customer confusion.*

<Img
img="/uploads/customer_loyalty_program_74bbe1728f.jpg"
alt="Customer loyalty program based on clients’ activities"
src="Nook Vibrant Kitchen gives points for every type of activity"
/>

**Expand the audience and attract new users for whom your product has great value.** Here, the marketing strategy primarily ensures an influx of new users so that the number of loyal and engaged users outweighs those who have lost interest in your product.

**Engage in dialogue with customers.** Ask users for their opinions about the service or product they purchased, and about the ordering, delivery, and other processes. Loyalty increases when people understand that brands listen to them and respond to criticism. Additionally, responses in surveys and questionnaires will point out the strengths and weaknesses of the product and service. Addressing these deficiencies will lead to an increase in Retention Rate.

<Img
img="/uploads/survey_to_ask_for_feedback_4ae6f3f5ad.jpg"
alt="Survey to ask for feedback"
src="The user is asked to take a survey and leave an opinion about the online store's performance"
/>

## Summary

Retention rate is the customer retention rate, calculated over a chosen period of time (day, week, month, etc.). This metric is essential for evaluating the product's usefulness to the audience, reducing marketing expenses, and increasing business sales.

The RR formula considers the ratio of customers at the beginning and end of the period, along with the number of new users. There is no universal rule for what the customer retention rate should be; for evaluation, examples from one's own business field or previous data are used.

In addition to Retention Rate, other metrics can be calculated to increase marketing effectiveness, such as customer lifetime value, churn rate, repeat purchases, use of rewards, and loyalty and satisfaction indexes.

To improve RR, companies enhance the product, simplify its usage, launch marketing campaigns targeting existing customers, and maintain constant communication with them.

Retention rate measures customer retention over time, aiding in evaluating product usefulness, reducing marketing costs, and boosting sales.

retention-rate-hoe-to-calculate.png

About what it means, why the Retention rate is used, as well as how to calculate the customer retention rate and increase the RR.

Retention Rate: How to Measure and Improve the Metric

Retention Rate: How to Calculate and Improve the Metric

<Video
url="https://www.youtube.com/embed/a6zMy3wL7ZM?si=h2RdGj6_FIDkiQSY"
/>

Advertising has long penetrated into movies, computer games, and other content, often in a native form, where the product is integrated into the plot instead of being directly advertised with a call to action. Such seemingly casual mentions constitute product placement, which has become a whole industry and entered popular promotion channels. The market for this direction is growing every year: if in 2023 [**the investment amounted**](https://www.statista.com/statistics/915174/product-placement-revenue-worldwide/) to nearly $30 billion, then by 2026 it is forecasted to grow to $41 billion.

Integration of advertising into content is costly, but businesses are willing to pay because this format can increase brand recognition and boost sales. In this article, we'll delve into what product placement is, its types, and the benefits it brings to companies.

## What is product placement and why is it needed


**Product placement** is the most [**native advertising**](https://altcraft.com/glossary/native-advertising-its-pros-and-cons-its-types-and-benefits) of a product or company in content: movies, cartoons, computer games, music videos, and even books. The mention or demonstration of the brand is seamlessly integrated into the narrative and becomes a part of it. This format is not even perceived as advertising, unlike placements on social media, websites, and other resources.

Interestingly, the first product placement appeared in painting. In Eduard Manet's painting "A Bar at the Folies-Bergère" (1882), a bottle of "Bass" ale was placed on the counter alongside other bottles. It featured the recognizable logo of the product produced by a well-known brewery company of that time. It is unknown whether the artist added such an image for payment or simply depicted the spirit of the time.

Product placement is an opportunity to:

- **Expand the audience and increase recognition** because millions of people watch movies, play computer games, which are not always accessible through other channels. 

- **Shape the right image of a product or company.** With skillful product placement, brand products are showcased in a positive context, shaping the desired business associations with the product. For example, a certain brand of sunglasses becomes the attribute of a strong hero who evokes admiration. And negative characters are prohibited from using Apple products on screen. Mercedes-Benz forced filmmakers to blur all their logos in the movie "Slumdog Millionaire." Such brand advertising created negative associations with poverty depicted on screen when cars of this brand drove by. 

- **Boost sales of brand products.** For example, after the release of the "Barbie" movie, purchases of Mattel dolls [**increased by 25%**](https://www.marketingweek.com/mattels-marketing-barbie-uplift/) compared to the previous year. The company prepared for such growth and even released a new collection.

## Types of product placement

Product placement is divided into several types:

<Table>
| **Type** | **Description** |
| ------ | ------ |
| Visual demonstration| The product itself, a logo or other elements that clearly hint at a certain brand appear in the frame. This type is direct product placement, which is often used in movies. |
| Verbal reference| The brand is not shown on the screen, but it is talked about in the context of a conversation. Such product placement in films is prescribed at the script level. For example, the hero of the movie "Call" says in one of the scenes: "Only Megafon has a connection here". And the brand mention can also be textual, when the product placement is embedded in the book. |
|Interaction with the product | The brand's goods are actively used in movies or even become an important part of the story. Such an example is the yellow Chevrolet Camaro car into which the autobot Bumblebee from the movie "Transformers" turns. |
</Table>

Product placement in games, movies, books, music videos uses such formats depending on the story and the wishes of the brands. 
## Advantages and disadvantages of product placement

Native advertising in audiovisual content is a powerful but ambiguous promotional tool with its own set of pros and cons.
### Product placement: advantages 

**Wide audience reach:** Content is consumed by millions of people, giving the brand a higher chance of attracting attention. Moreover, these people come from different parts of the world.

**Subtle product promotion:** Product placement does not include the usual product description and call to action, thus avoiding pressure on the viewer. Instead, it demonstrates the product's capabilities, allowing potential customers to evaluate its features on their own. This format is less likely to be as irritating as traditional advertising.

**Unlimited lifespan:** The content where the advertisement appears is created to last for many years and essentially becomes timeless. We still rewatch old movies and read books written many years ago. Therefore, advertising in such content products becomes infinite in terms of duration.

### Product placement: disadvantages

**Cost of placement:** It is difficult to know exactly how much brands pay for placement in, for example, movies. However, it is known that these amounts are in the millions. The more potentially successful the project, the higher the price for advertising. Only brands with large promotion budgets can afford this.

**Reputational risks:** Native advertising in films is also linked to the personality of the actor interacting with the product. If this person gets into a situation that tarnishes their reputation, it reflects on the brand as well.

**Opaque assessment of advertising results:** If you decide to showcase your product through a frame in a movie, a fragment of a game, or a TV show, you must accept the fact that it is impossible to track the exact effect of such integration. The effectiveness of a product placement campaign is measured by indirect indicators, such as an increase in product sales after the release of a movie featuring the advertisement.

## Examples of product placement in movies

### "Back to the Future"

The film "Back to the Future" is a classic example of product placement and possibly the first thing that comes to mind when talking about advertising in movies. The legendary Nike sneakers from the second part of the trilogy have become iconic.

<Img
img="/uploads/back_to_the_future_cbcf29d2b7.png"
alt="The Nike sneakers in Back to the future"
/>

However, in the first film, the protagonist also wears shoes from this brand. The advertisement appears right in the opening credits. 

<Img
img="/uploads/nike_sneakers_in_back_to_the_future_890967ddb3.png"
alt="The protagonist in Back to the future also wears shoes from Nike"
/>

Additionally, in one of the shots in the second part, one of the characters is dressed in a competing brand, Adidas.

<Img
img="/uploads/adidas_brand_back_to_the_future_9f1c526fc5.png"
alt="The Adidas in Back to the future"
/>

In both films, the characters drink Pepsi with designs from different eras. 

<Gallery>
<GalleryItem
original="/uploads/pepsi_in_back_to_the_future_380036ad66.png"
thumbnail="/uploads/pepsi_in_back_to_the_future_380036ad66.png"
/>
<GalleryItem
original="/uploads/pepsi_in_different_eras_3d970694b3.png"
thumbnail="/uploads/pepsi_in_different_eras_3d970694b3.png"
/>
</Gallery>

A comical scene involves the brand Calvin Klein. Marty McFly's mother from the past thinks that his name is Calvin Klein because she sees the brand name on his underwear and assumes it's his name. 

<Img
img="/uploads/marty_mcfly_underwear_c2da5dc62d.png"
alt="The brand Calvin Klein in Back to the future"
/>

### "Home Alone"

The famous comedy also features quite a bit of advertising. In the first film, the characters only drink Pepsi.

<Gallery>
<GalleryItem
original="/uploads/home_alone_pepsi_ebc16dc331.png"
thumbnail="/uploads/home_alone_pepsi_ebc16dc331.png"
/>
<GalleryItem
original="/uploads/pepsi_in_home_alone_c5ec51c238.png"
thumbnail="/uploads/pepsi_in_home_alone_c5ec51c238.png"
/>
</Gallery>

However, in the second part, "Home Alone 2: Lost in New York," they switch to Coca-Cola.

<Gallery>
<GalleryItem
original="/uploads/home_alone_part_two_coca_cola_957d09e78e.png"
thumbnail="/uploads/home_alone_part_two_coca_cola_957d09e78e.png"
/>
<GalleryItem
original="/uploads/coca_cola_home_alone_lost_in_new_york_cfc605a364.png"
thumbnail="/uploads/coca_cola_home_alone_lost_in_new_york_cfc605a364.png"
/>
</Gallery>

The plot includes advertising for the airline American Airlines.

<Gallery>
<GalleryItem
original="/uploads/airline_american_airlines_49f393a465.png"
thumbnail="/uploads/airline_american_airlines_49f393a465.png"
/>
<GalleryItem
original="/uploads/airplane_in_american_airlines_2b913abe1b.png"
thumbnail="/uploads/airplane_in_american_airlines_2b913abe1b.png"
/>
</Gallery>

Santa Claus gives Kevin Tic Tacs instead of candy, which he has run out of.

<Img
img="/uploads/santa_claus_gives_kevin_tic_tacs_e624f14bfd.png"
alt="Santa Claus gives Kevin tic tacs in Home alone"
/>

In a store, the young protagonist buys Tropicana juice and Tide detergent along with other items. 

<Img
img="/uploads/tropicana_juice_and_tide_2f3bf86329.png"
alt="The young protagonist buys Tropicana juice and Tide"
/>

The burglars track Kevin in a Dodge vehicle.

<Gallery>
<GalleryItem
original="/uploads/burglars_track_kevin_in_a_dodge_vehicle_41cd08f6a4.png"
thumbnail="/uploads/burglars_track_kevin_in_a_dodge_vehicle_41cd08f6a4.png"
/>
<GalleryItem
original="/uploads/burglars_track_home_alone_394c0ef4c8.png"
thumbnail="/uploads/burglars_track_home_alone_394c0ef4c8.png"
/>
</Gallery>

In the second film, some scenes were shot in the legendary Plaza Hotel in New York.

<Img
img="/uploads/plaza_hotel_home_alone_83689c5bf4.png"
alt="The legendary Plaza Hotel in New York"
/>

In one scene, even the hotel's owner, Donald Trump, appears, with Kevin asking him for directions.

<Img
img="/uploads/legendary_plaza_hotel_545b75756e.png"
alt="The hotel's owner, Donald Trump with Kevin in Home Alone"
/>

### "Forrest Gump"

In the story, several well-known magazines are visible multiple times: People, Life, Playboy, and Fortune. Some are read by the characters, and in one, Forrest Gump himself appears on the cover.

<Gallery>
<GalleryItem
original="/uploads/forrest_gump_3c518d3cf1.png"
thumbnail="/uploads/forrest_gump_3c518d3cf1.png"
/>
<GalleryItem
original="/uploads/forrest_gump_playboy_31b08406a5.png"
thumbnail="/uploads/forrest_gump_playboy_31b08406a5.png"
/>
<GalleryItem
original="/uploads/forrest_gump_life_d0656c7679.png"
thumbnail="/uploads/forrest_gump_life_d0656c7679.png"
/>
<GalleryItem
original="/uploads/forrest_gump_fortune_6ec12cef1a.png"
thumbnail="/uploads/forrest_gump_fortune_6ec12cef1a.png"
/>
</Gallery>

The film features advertisements for Dr. Pepper and 7up sodas, as well as Budweiser beer.

<Gallery>
<GalleryItem
original="/uploads/forrest_gump_drpepper_58171388e1.png"
thumbnail="/uploads/forrest_gump_drpepper_58171388e1.png"
/>
<GalleryItem
original="/uploads/forrest_gump_sevenup_366d88e688.png"
thumbnail="/uploads/forrest_gump_sevenup_366d88e688.png"
/>
<GalleryItem
original="/uploads/forrest_gump_beer_404fe12af8.png"
thumbnail="/uploads/forrest_gump_beer_404fe12af8.png"
/>
</Gallery>

Forrest runs in Nike sneakers and gear, seamlessly integrated into the plot. 

<Gallery>
<GalleryItem
original="/uploads/forrest_gump_nike_47c92fac88.png"
thumbnail="/uploads/forrest_gump_nike_47c92fac88.png"
/>
<GalleryItem
original="/uploads/forrest_gump_gear_19e35999ae.png"
thumbnail="/uploads/forrest_gump_gear_19e35999ae.png"
/>
</Gallery>

The character receives a letter from Apple.

<Img
img="/uploads/letter_from_apple_forrest_gump_61ebb6f8df.png"
alt="Letter from Apple as product placement"
/>

### "The Devil Wears Prada"

This film lived up to its name and became a showcase for luxury brands.

In the opening scenes, the fashion magazine editor-in-chief, Miranda Priestly, enters with a Prada handbag. 

<Img
img="/uploads/the_devil_wears_prada_e2e8872346.png"
alt="Prada handbag as product placement"
/>

The mention of this brand also appears on a poster in the office.

<Img
img="/uploads/poster_in_the_office_aded804849.png"
alt="Prada poster as product placement"
/>

Miranda arrives at work in a Mercedes.

<Img
img="/uploads/devil_wears_prada_mercedes_354a988cc1.png"
alt="Mercedes as product placement"
/>

She gets coffee from Starbucks.

<Img
img="/uploads/devil_wears_prada_starbucks_994bd5a945.png"
alt="Coffee from Starbucks as product placement"
/>

In the magazine office, employees use Apple equipment.

<Gallery>
<GalleryItem
original="/uploads/apple_equipment_devil_wears_prada_b4ea584062.png"
thumbnail="/uploads/apple_equipment_devil_wears_prada_b4ea584062.png"
/>
<GalleryItem
original="/uploads/apple_equipment_1d1f52cbc4.png"
thumbnail="/uploads/apple_equipment_1d1f52cbc4.png"
/>
</Gallery>

Of course, in a film about the fashion world, one of the most famous luxury brands appears. Anne Hathaway's character undergoes a transformation and wears Chanel jewelry, while Miranda receives a gift from the fashion house, seen behind her in a bag. 

<Gallery>
<GalleryItem
original="/uploads/shanel_jewelry_devil_weras_prada_f1efd649ad.png"
thumbnail="/uploads/shanel_jewelry_devil_weras_prada_f1efd649ad.png"
/>
<GalleryItem
original="/uploads/devil_wears_prada_chanel_02d2fbf1c0.png"
thumbnail="/uploads/devil_wears_prada_chanel_02d2fbf1c0.png"
/>
</Gallery>


### "Twilight"

In the first part of the saga, vampires drive Volvo and Mercedes cars.

<Gallery>
<GalleryItem
original="/uploads/volvo_twilight_ead623064e.png"
thumbnail="/uploads/volvo_twilight_ead623064e.png"
/>
<GalleryItem
original="/uploads/twilight_mercedes_3d763688f8.png"
thumbnail="/uploads/twilight_mercedes_3d763688f8.png"
/>
</Gallery>

### "Avengers: Endgame"

Only a few brands could afford advertising in the highest-grossing film in the world as of 2019. In one scene, the Citi bank logo appears.

<Img
img="/uploads/citibank_commercial_in_the_movie_avengers_74f8a43454.png"
alt="Citibank commercial in the movie Avengers"
/>

And Robert Downey Jr.'s character drives a stylish Audi.

<Img
img="/uploads/robert_downey_audi_84663266b0.png"
alt="Robert Downey Jr.'s Audi"
/>

### "Transformers"

In the film, the yellow-and-black Chevrolet Camaro becomes a story hero — the Autobot robot Bumblebee.

<Img
img="/uploads/transformers_the_bumblebee_vehicle_9eedcb2a61.png"
alt="Product placement in Transformers, the Bumblebee vehicle"
/>

## Summary

Product placement is the promotion of brands through visual demonstration or mention in audiovisual content such as movies, music videos, games, and more. This type of advertising subtly forms a positive image of the product or company, expands the audience, and works indefinitely. The brand is shown visually, mentioned, or even integrated into the plot so that the characters interact with its products.

Despite its advantages, product placement is expensive, so it is usually used by high-end brands. It's also challenging to track the actual effect and depends on the reputation of the celebrities who advertise the product on screen.

Today, brand integration into multimedia content remains relevant, and investments in this direction continue to grow.

Product placement integrates brands into content, boosting recognition and sales subtly, though it's costly and hard to measure impact.

product-placement-what-it-is.png

About what product placement is, what it is like and what benefits it brings to companies.

Product Placement: Types & Examples of Advertising

What Is Product Placement: Types and Examples of Advertising

<Video
url="https://www.youtube.com/embed/XQE3Ow7EHMY?si=5UvMKRxRetXotwu1"
/>

The effectiveness of an advertising campaign isn't always assessed solely by direct metrics like conversions or clicks. This is because not every marketing action directly influences the outcome. It may turn out that the purchase was not influenced by the channel recorded in the analytical report. For example, if a company used attribution models and chose last-click attribution, giving credit to the last channel before the desired action occurred.

Such a narrow view of results can be misleading, leading marketers to draw incorrect conclusions for planning future campaigns: if it worked this time, the same tactics should be repeated next time. However, it turns out that the old approach inexplicably doesn't work.

To examine marketing effectiveness from different angles, the method of control groups is used. In this article, we'll explain what it is, why this approach is necessary for businesses, and how research is conducted.

## What is a control group

**A control group** is a method for assessing the effectiveness of marketing campaigns (email, push, SMS notifications) using individuals who have not engaged in marketing communications with the company or have received a limited number of notifications (e.g., only transactional ones). The method originated in science, where it was used to demonstrate the relationship between one phenomenon and another.

Through control groups, the actions of customers who have not received advertising messages from the brand, except for transactional ones (global group), or who have received a limited number of messages, are studied. Then, their activity is compared with that of users who received the messages. Ultimately, the aim is to evaluate whether marketing efforts have influenced the purchase decision or if the customer was ready to make a purchase without additional reminders.

The control group assesses the number of products/services sold or requested, the average order value, views, subscriptions, website visits, and other metrics.

*For example, an email campaign promoting a shoe sale with two variations of text and design (A/B testing) resulted in sales doubling. Initially, the campaign seemed successful, with one text and design combination, A, appearing more effective. However, analysis with control groups revealed that a significant percentage of purchases were made by users unaware of the promotion, as they did not receive notifications.*

## Test and control group: differences 

These two concepts may seem similar in meaning, but the principles of working with them differ.

<Table>
| **Test Group** | **Control Group** |
| ------ | ------ |
| Users who are sent variations of content with different variables over a certain period. For example, A/B testing is conducted in an email campaign, where one portion of subscribers receives version #1 of the text, while another receives version #2. | Customers receive content without any changes to assess the impact of variables from the A/B test on the results. Or they are not shown anything (a scenario where there is no interaction with the user through promotional channels). |
</Table>

It's important that when conducting A/B testing, all results are taken into account: both the control and test groups. After the study, negative control is also evaluated—how the absence of any changes affected the users.

The control group confirms or refutes the results obtained from the test group.

## The role of control groups

Utilizing a control group:

- **Enhances the effectiveness of marketing campaigns** by providing a broader analysis of results, demonstrating the true impact of marketing on conversions or other metrics. Irrelevant offers are excluded, leading to the creation of more desirable [**offers**](https://altcraft.com/glossary/offer-what-it-is-what-for-it-is-used-and-how-to-come-up-with-it) for customers. 

- **Saves your resources.** Research identifies poorly performing or unnecessary channels where you allocate budgets. After their exclusion, time and money are freed up for other promotion methods. 

- **Indicates changes in customer preferences and market situations** that may have gone unnoticed. Over time, the audience becomes fatigued, and even more attractive interfaces from competitors can lure users away. The control group will identify which incentive will re-engage customers with the brand. 

- **Tests hypotheses for new advertising campaigns.** For example, you want to test whether the number of purchases in an online store will increase if push notifications about an additional discount on [**abandoned cart items**](https://altcraft.com/blog/how-to-reduce-cart-abandonment-rate) are sent.

## Platforms for working with control groups

The method is flexible and adaptable for hypothesis testing across various digital resources:

- **Email and other distribution channels:** here, the impact on user activity through email, push notifications, SMS, or messengers is explored. For example, the influence of a discount coupon for the test group and its absence for the control group is examined. 

- [**Landing pages**](https://altcraft.com/glossary/what-are-landing-pages-and-why-they-matter), where different user samples during A/B testing are shown variants that differ from each other. Texts, images, and headlines are changed for the test groups, while the control group always sees the same variant without alterations. 

- **Advertising:** various variables such as creatives, offers, texts, and formats are possible for the test group here.

## When not to use control groups

Forming a control group is not necessary for every marketing campaign. The method will not yield results if [**the customer database**](https://altcraft.com/glossary/everything-about-the-customer-database) is insufficient. For an audience of a few hundred people, the study will be statistically insignificant (too small a sample size to make a global conclusion).

Additionally, part of the revenue will have to be forfeited. For example, the global control group will be excluded from mailings and may not make any purchases if they do not receive marketing messages. To minimize losses, some companies refrain from using the control group method during peak sales seasons.

This research should also be avoided if it is not possible to accurately track all customer interactions with the company across all online sources, if there are several of them.

## Disadvantages of control groups

The conclusions of the study may not always be applicable to a broader audience due to non-representativeness. The control group represents a specific percentage of customers, which may not always reflect the characteristics of all users. If more men were chosen for the test, data on their behavior may be irrelevant to the female audience.

Control groups are usually small compared to all users. Because a company will not risk revenue for research purposes and allocate more than 20% of customers for it. Such a quantity may be statistically insignificant, resulting in inaccurate results.

The company cannot account for all external factors that influence the decisions of the control group. For example, a brand conducted mailings for testing and checked them against the control group. Suppose the result was weak in terms of conversion quantity. That is, the advertising campaign was ineffective. But if it is known that at that time a competitor held a closed sale with significant discounts, such a conclusion can be challenged.

## How to conduct research with a control group

Start by defining the goal: what hypothesis do you want to test through control groups and what answer do you expect to receive. Then you need to:
1. **Identify [**the audience segment**](https://altcraft.com/blog/how-and-why-to-segment-target-audience) for the study.** Common characteristics can be shared among users. For example, customers who have made purchases totaling N over the past six months.
It is important for the control group to reflect those to whom advertising messages were sent—be similar in demographics and other characteristics. Otherwise, the study will be unreliable. 

2. **Choose the appropriate number of users that affects the significance of the result.** Here, the rule applies: the larger the audience size for targeting, the fewer users should be used for research. And vice versa: a smaller quantity requires more people for the sample. For example, for a control group of 12,000, it may be 5%, while for 2,000 customers, it is advisable to choose 10-20%.
If the research results show that the company is performing well, the control group will decrease in subsequent tests. Conversely, if the advertising is ineffective, the number of users in the sample should increase with each subsequent check. 

3. **Set the duration of the study.** It can be short-term for a single campaign, but a longer one over several months, taking into account external factors, will provide more ideas for improving effectiveness. 

4. **Make a mailing in the context of the advertising campaign with carefully crafted content for this purpose.** Testing of both a single marketing activity and a set of actions is possible. Then you can assess the effectiveness of the entire strategy. Choose the option that meets the business's needs. 

5. **Analyze the results after completing the study.** For example, if 15% from the control group made a purchase, and 30% received a promotion email and also made a purchase, it means the campaign worked. However, if the percentages in both groups are almost identical, the advertising strategy is likely not effective enough.
To assess the significance of the results, use one of [**the A/B testing**](https://altcraft.com/blog/what-is-statistical-power) calculators. 

6. **Adjust campaigns and strategies to improve performance.** At this stage, you may realize that you need to abandon certain channels that are not yielding results.


## Summary 

A control group is a method for testing marketing campaigns in which a certain number of users are excluded from all or some channels of brand communication. This is important to assess the significance of advertising activities in achieving business results, save budget, time, test hypotheses, and identify market changes.

There are two types of control groups: global (customers receive only transactional messages) and local (some marketing communications remain). Such research is necessary for conducting A/B tests to understand the effect of no changes in campaigns.

The choice of a control group depends on the size of the audience for advertising: the smaller the number of people in the sample, the more needed for tests. Advertising is launched to this audience, and the result is analyzed. Afterwards, marketers draw conclusions about the effectiveness of strategies and adjust them.

A control group excludes users from some brand communication channels, essential for testing marketing impact, saving resources & understanding market changes.

control-group.png

About what a control group is, why a business needs this method, and how the research is conducted.

Control Group: Definition & Why Needed in Marketing

Control Group: What It Is and Why It's Needed in Marketing

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