Optimize Customer Acquisition in Six Steps
Optimizing customer acquisition is a necessary element in any successful business. Your success needs the development of a robust, manageable, and scalable customer acquisition strategy designed to generate the targeted new customer inflow. Your organization needs a strategy with low levels of risk and an acceptable cost per new customer. Such a strategy and its tactical effort should be based on evidence of possible responses. These responses include actual tests, historic response rates, and response erosion.
Incorporate Six Strategy Steps
To develop your customer acquisition strategy, several steps are necessary. The six steps include the identification of targets by understanding the market, the target audiences, and the competitive environment. Using research data, new strategies and tactics can be developed based on the information gained, creative approach, message, and targeting. Within this strategic approach, new customer acquisition can be optimized by targeting those niches where the organization has the highest market penetration. New customer acquisition comes when reliable and profitable direct response target is available.
Because the decision to try new offers can be complex, actual market tests are preferred. These tests establish response rate and cost per new customer baselines before rolling out large scale campaigns. Through this test-and-measure-process, all identified tactics can be evaluated and optimized in order to recommend a new customer acquisition plan designed to meet the organization’s goals and assist in the optimization of the marketing budget.
1. Set the targets
In order to develop your customer acquisition strategy, the first step consists of defining detailed targets.
- Review available data and conduct a needs assessment to identify the specific questions to be answered.
- Develop a projection of demand for the service based on current awareness, usage, and demographics.
- Project new customer acquisition with current efforts.
- Identify the gap between projected demand and targets for growth.
- Refine targets by specifying them at the product/service and market segment levels.
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2. Understand the target market
Develop a customer profile of the target market including variables such as demographics, geography, attitudinal values, needs, and usage. Apply the profile to the general population in the market.
- Geography is key. Mapping existing data can reveal geographic implications for targeting.
- Identify the primary and secondary target niches.
- Develop a profile of current and prospective customers including general market profiles, segment identification, and segment-specific customer profiles to include:
- Demographic measures
- Awareness, knowledge, interest, and attitudes toward proposed messaging
- Media habits
- Motivators and barriers
- Time windows
- Attitudinal values toward the brand, the brand attributes, and the competition
3. Understand the competitive position
Develop a customer acquisition strategy by understanding your competitors. Employ what you learn into your customer acquisition strategy.
- Conduct an assessment of competing offers in the target segments.
- Examine competitor strategies, tactics, and likely response to your positioning.
- Identify competitor weaknesses and strengths relevant to the target products/services.
- Identify no-win competitive arenas, which will need to be avoided in your campaign.
4. Develop an inventory of available strategies
Assess available resources and scalability of current customer acquisition strategies and tactics.
- Assess available acquisition tools at current activity levels and scaled-up levels. Aim at scoring methods both for their relative effectiveness and preferably at the cost per customer level.
- Identify the optimum mix of strategies and activity levels to use in the customer acquisition effort. Look at available response data for each strategy/recruitment method tested and/or in place.
- Define targets for acquisition to be conducted via new recruitment strategies/tactics.
5. Targeting prospects that look like your best customers
By analyzing market penetration in each segment and the effectiveness of each available strategy at generating new customers, you can uncover and prioritize both the top target audiences and the top acquisition tactics. When a customer profile has been developed that identifies reliable response predictors, you can concentrate your efforts on the top niches.
Additionally, applying the customer profile to new customer lists is a powerful method to grow new business by tapping into your existing strengths. You can score prospect lists and prioritize initial approaches or follow-up levels by prospect score. As an example, developing a scored prospect database can help separate efforts. Low-scoring prospects can be eliminated from mailings or pursued with low-cost approaches. And top-scoring prospects can receive additional follow-up or a premium package designed to generate a higher impact.
When a custom predictive model has not been developed, you can initially explore off-the-shelf geodemographic models such as esri Tapestry Segmentation. This can be instrumental in pursuing and identifying target segments that have similar lifestyles to those of your top customers.
Monitoring success ratios in new customer acquisition allows for continuous improvement. As each offer is deployed and compared against the control tactic, improvements and refinements can be made.
The rewards for optimizing your customer acquisition strategy are great. This process, accompanied by a sound retention strategy, is essential to short- and long-term survival and success. By developing a six-step systematic approach, your organization will become well equipped to manage your own growth. We invite you to explore the rest of our web site and reach out to explore what might be the best fit for you. Let’s get the conversation started.
Updated from Optimum Prospecting by Jorge Restrepo, CEO at EurkeFacts Smart Research Solutions, © 2006.