Many companies have adopted customer relationship management (CRM) systems that can support both acquisition and retention by gathering data from every contact with prospects and customers. Just collecting data should not be an end unto itself, however. The real focus should be on developing a data strategy and tuning the CRM system to help your company acquire and retain the right types of customers.
The goal for the acquisition phase of your program should be deciding which prospects most closely match your company‗s "ideal prospect" profile, but you should also decide which prospects don‘t meet your criteria for acquisition and eliminate them up front. This simple decision helps focus your marketing and acquisition efforts while saving costs and increasing your return on investment (ROI).
Analyzing your marketing campaigns to determine which are most effective in bringing in new customers is also important. A CRM system that is able to tag data (assigning each contact to a specific campaign) lets you analyze the return on the investment you are making in your marketing effort as well as its overall effectiveness in identifying likely prospects. Another benefit of tagging is that it lets you look at marketing programs and their related expenses by leads generated, customers acquired, and potential and realized revenue. This will enable your company to better tailor campaigns to individual customers and prospects based on response or effectiveness rates.
Acquiring customers is critical to the financial success of your business. Many companies take the decision to land-grab customers in order to secure new business, however a more sustainable approach is to strategically determine what type of customer best suits your business needs. This more strategic approach will guarantee you are able to engage high quality, profitable customers.
In order to secure new customers, companies will look to utilise a number of individual acquisition channels such as direct mail and above the line advertising. Nevertheless, in order to guarantee success, companies need to adopt a fully integrated multi-channel approach.
By doing so, companies immediately become more available to their potential customer base.Touch‗s experience of delivering effective multi-channel solutions including inbound and outbound telephony, DM fulfilment as well as email and SMS marketing allows businesses to adopt an approach to acquisition which embraces all available communication channels. Furthermore, Touch‗s knowledge and expertise in customer lifecycle management allows us to advise our Clients which ensures they are always utilising the most cost effective solution aligned to their business needs.
Touch is able to demonstrate agility in recognising that consumers' communication channels evolve throughout the customer lifecycle, and by having the capabilities to readily respond to customers' demands, 2Touch can guarantee improved business performance.
Through our brand immersion methodology we have successfully implemented acquisition strategies for a number of Clients. Our conversion statistics prove that we can deliver the volume of customers required as well as acquiring customers who are of high value.
2.Successful Strategies Of Customer Acquisition
Customer acquisition is a process of identifying, approaching and developing new customer
relationships. It is important that new relationships formed are acquired from the right type of customer, in order to ensure a sustainable future.
Acquiring customers is one of the most important factors in the success of a business. The importance of acquisition not only lies in the volume of customers acquired, but the profitability and value that the customer will bring.
Adopting a strategic approach is advised when it comes to acquiring customers. Determining what type of customer best suits the business needs, enables you to target customers which will be profitable and add value to the organisation.
Some companies will take the decision of land-grab customers in order to secure new business. It is inevitable that this strategy will acquire customers but not necessarily the customers who will best suit the business needs.
A successful customer acquisition strategy is that of which adopts a fully integrated multi channel approach. Giving customers the choice to utilise their preferred channel, instantly creates a positive impact on potential customers. Also, this fully integrated method means businesses increase availability to their potential customer base.
Companies with successful acquisition strategies recognise that consumers; communication channels evolve throughout the customer lifecycle. This enables the company to prepare to adapt to such changes in a responsive manor.
Another important factor of customer acquisition is ensuring that a company‗s brand immersion methodology is aligned with their customer acquisition strategies. Cultural beliefs and values of the company need to be highlighted in any acquisition campaign a business implements in order to not only acquire but retain high value and profitable customers. This will not only create a positive experience for the customer, but have a positive impact on the overall brand of the business, heightening it‗s brand awareness to the customers.
3.Acquiring New Customers
As I have said, customers are the life blood of your business. Without them, you are out of business, fast. The majority of your energy will be expended acquiring and keeping customers at your business.
In my book, "Don't Be Afraid To Start Your Business", I go into great detail about marketing your business. Acquiring customers actually falls under the heading of marketing, however I want to go into greater detail in this chapter how to do it.
Customers come to our businesses in one of three forms. No, not Good, Bad, and Ugly, but rather New, Repeat and Referral customers.
New customers are the hardest and most expensive to get. You will spend more time, money and energy attracting new customers to your business. If you are just starting a business, listen closely, because your success here will determine whether you are in business two years from now. Once you've acquired some new customers, you can quickly move to the other two levels.
How do you attract new customers to your business? If there was one simple answer to that question, I would be worth millions of dollars. Although there isn't a single answer, there are techniques you can use that will make this task easier and less expensive. Learn to avoid the mistakes others make and you'll increase your odds for success.
4. common mistakes in customer acquisition strategies.
Understanding these common mistakes is an important step toward overcoming them and toward developing effective customer acquisition programs.
1 Narrowly Defining "New" Customers.
Marketing professionals have long recognized the semantic confusion over the concept of "new." One example of this confusion involves thinking about new products. To be classified as "new," does the product have to be "new to the world," or "new to our market," or "new to our company" or "new to our customer?" The answer is that "new" applies to all four situations.
Semantic confusion is also associated with the new in new bank customer acquisition programs. The question is, "What is a 'new' customer?"
The most frequent answer is that a new customer is someone "new" to the community. Individuals just moving into the community are important to the bank, and most retail bankers would like to capture as many of these new customers as possible. However, "new to the community" constitutes a narrow definition that leads many retail bankers to mistakenly underestimate the opportunity to attract new customers.
Demographic information about many communities suggests that the number of new households or individuals moving into markets is small. In some markets, the demographics may suggest that the community is losing population. With such information, it is easy for bank marketers to conclude that the opportunities a "new customer acquisition" strategy provides is small at best. As a result, the bank makes a token effort to capture those few new arrivals to the community. Not surprisingly, little marketing time, talent and resources are invested in customer acquisition programs.
4. Under estimating the Profitability of New Accounts.
Bankers have long argued that retail banking is an "expensive" business. Operating branches and performing all the retail banking functions carry a substantial cost that has to be covered.
Because banks must cover their retailing costs, bank managers and controllers often talk about fully loaded costs and try to calculate the true costs of retail banking services. Estimates of fully loaded costs are likely to be used in pricing such services or in calculating their profitability.
The appropriateness of using information or estimates of fully loaded cost when making retail bank product pricing decisions is under review in many banks. Without rearguing cost allocations or the wisdom of pricing based on fully loaded costs versus variable costs, it is useful to recognize the impact of this sort of review on new customer acquisition programs.
While retail banking is costly, these costs enable the bank to acquire and maintain a certain capacity to serve customers. Banks want to use the available capacity as fully as possible to improve profitability. Because existing costs must be covered, it is logical that existing customers must cover these costs. But one must ask if it is appropriate to allocate to each new customer the fully loaded costs associated with an existing customer.
The most common answer is yes. The prevailing wisdom says that the revenues new customers generate should cover the fully loaded costs associated with existing customers. If new customer profitability analyses use fully loaded costs, then the conclusion will be that new customers are either marginally profitable or are outright unprofitable. Such conclusions provide bankers a reason to downplay or ignore customer acquisition programs, a major mistake that is receiving more attention.
Some bankers interpret the value and profitability of new customers differently. They recognize that the bank's existing cost structure buys capacity and opportunity to serve customers. They also see that existing customers cover the costs. If existing customers were not already covering the bank's costs and providing a margin of profit, it is unlikely the bank would stay in the retailing business.
If costs are already being covered by existing customers, then it makes little sense to charge the same costs to newly acquired customers. Bankers who recognize this also recognize a higher value for new customers and are much more likely to take an interest in customer acquisition programs.
To the extent that the bank has excess capacity, successful customer acquisition programs enable the bank to more fully use existing capacity. Clearly, it is a mistake to underestimate the value of new customers based on erroneous assumptions about the costs of serving those new customers. This is especially true when the bank has excess capacity.
5. Targeting Promotional Messages Poorly.
Assuming that "new" is defined broadly to include new accounts being opened by residents in our market, then a bank should focus on developing strategies that achieve its goals of attracting a desired number of new customers.
Often, banks that pursue an active customer acquisition strategy tend to have a marketing strategy so broad that it produces little success. These broad customer acquisition programs tend to use newspapers as their primary marketing medium. In some markets, newspaper advertising efforts are supported by television or radio advertising.
In reality, the best opportunities to attract new customers are directly associated with their geographic proximity to physical banking facilities. The closer the customer is to a branch, the more likely it is that the bank can turn that non-customer into a new customer.
The best medium to deliver promotional messages to a clearly identifiable set of customers or prospective new customers is direct mail. However, many bankers refuse to consider direct mail seriously because they continue to associate it with "junk mail."
But direct mail provides a cost-effective, highly targeted way to get promotional messages to specific groups at a desired frequency. It avoids the substantial waste of broader promotional media, including newspapers.
6. Paying Inadequate Attention to New Customer Products.
The new customer promotional programs of many banks tend to focus on one product. This approach fails to recognize the variety of circumstances individuals and households face in opening new retail banking accounts. To succeed, it is necessary for the bank's program to promote a number of different products that meet the customer's specific needs.
The mistake occurs at two levels. First, any analysis of customer needs suggests that there are identifiable segments that need rather specific products. Since the most effective promotional programs are based on geographic proximity that may cut across various segments, it is necessary to have a product mix that supports such a marketing strategy.
Second, if the bank intends to have a broad product mix to meet the needs of several segments, the types of messages that must be conveyed will differ. To convey information adequately about the product mix places a heavy burden on newspaper advertising and virtually rules out television or radio as media alternatives.
However, in using a brochure, a substantial amount of product information can be provided in a format that customers can review at their leisure. Direct mail lends itself to providing the amount of information needed for a strategy that views the retail banking location as a major factor in the success of new customer development programs.
7. Failing to Offer Price Appeals.
While marketing arenas are intensely competitive, with consumers increasingly demanding discounts, coupons and other price benefits when making decisions, many banks' customer acquisition programs ignore the importance of price appeals.
It is not uncommon to find the primary theme of a bank customer acquisition program focused on some variation of image themes and prior advertising campaigns. These campaigns rarely attract customers. It is difficult for any advertiser to get customer attention, and this certainly applies to banks, including customer acquisition programs. However, an attractive price offer not only aids in gaining customer attention, but also increases the chances that a bank will be considered by potential customers. This price bonus could be something as simple as buying back checks from a competing bank or offering the bank checking account free for some period of time. Banks have done very little to make specific attractive price offers in promoting new bank products or services.
Simply including a specific attractive price offer does not mean that every new customer will take the price deal. But, including a price option increases the attention and pulling power of the ad and is likely to increase the total number of new accounts.
8. Failing to Offer Premiums.
Premiums operate at two levels within customer acquisition programs. The first involves the prospective customer, and the second involves the current customer.
Many bank customer acquisition programs do not offer an attractive, immediate incentive to which prospective customers may respond, despite substantial evidence that such premiums motivate prospective customers to take immediate action. Substantial evidence also exists that premiums are cost-effective in customer acquisition programs.
Because they grab attention, produce a high response rate, and have a low acquisition cost per new customer, premiums provide improved results for customer acquisition programs.
Word-of-mouth promotion, whether positive or negative, is widely recognized as a major factor in bank marketing. Bearing in mind that existing customers are also motivated by premiums, it is worthwhile for the bank to provide some incentive or premium for existing customers to refer new business to the bank.
Banks need to encourage word-of-mouth promotion and to recognize that it will be far more successful if existing customers are also provided with a premium or incentive for referrals.
8. Neglecting to Provide Employees Adequate Training.
When a prospective customer comes into the bank, it is critical that the employees who will be dealing with those prospects are extremely well trained.
One broad level of training requires that every employee in the bank from the chief executive officer and chairman on down, understands and believes that new customers are important. Thus, the first responsibility of marketing and training is to make sure this message is delivered and believed by every employee.
After this training has been completed, the specific employees who will be opening most of the accounts deserve additional training in several areas.
Sell to customer needs. While this sounds easy, it is important to note that some customers will want a bank's promotional offer. Fine, give those customers what they want. However, other customers, while attracted by the price offer, are willing to consider other products offered by the bank. However, it is essential that the bank employee never feel, or let customers feel, that there is any effort to sell them away from the featured price offer.
Reinforce the price deal. The employee must reinforce that the price is a great deal and show appreciation that the customer came in to take advantage of the opportunity.
Stress traditional cross-selling. Yes, employees are busy and other customers may be waiting, but it is critical to cross-sell additional bank products.
Stress the importance of new customers. The employees handling the customers must be convinced that they are doing a job that is critically important for the bank. If the bank develops a successful customer acquisition program, then the workload for these specific individuals is going to go up. This must be seen as a positive step rather than viewed simply as more work.
Without this step in training and developing proper attitudes among new accounts employees, customer service levels will not be very high and efforts to cross-sell will not be very strong.
9. Failing to Track and Calculate New Customer Costs.
Any customer promotional strategy must have a major commitment to track results accurately. The process of developing highly effective customer acquisition programs is more directly tied to tracking, testing and evaluating these programs than to developing radical new strategies.
Retail bankers must have a major commitment to track all aspects of these strategies. This provides the basis for making strategy adjustments that increase success rates and reduce costs per unit.
A strong tracking commitment also supports efforts to associate the appropriate costs with each new customer. Measuring customer acquisition costs over time is important in discussions of cost and revenue associated with customer acquisition programs.
10. Failing to Make a Long-term Commitment.
The final mistake that retail bankers are apt to make is to view customer acquisition programs as tactical and short term rather than strategic and long term.
A tactical or short-term view of customer acquisition programs would focus on adding a certain number of new customers in a particular time period. The success of the program would be evaluated based on delivering new-customers to the bank.
A strategic or longer-term view of customer acquisition programs would consistently focus on the goal of acquiring new customers. If the strategy is done well, over time the bank will be able to improve its market share in retail banking dramatically and will have the opportunity to balance its customer base for improved profitability.
Tactical customer acquisition programs tend to come from the bank's retail marketing operations. Strategic programs are much more likely to come from the bank's top management. With buy-in from top management, it is much more likely that customer acquisition programs will continue to yield attractive results over a long period of time.
Clearly, as the nine mistakes discussed in the article demonstrate, banks that want to expand their customer bases must not only recognize that "new" customers are right in their back yards, but must also develop their customer acquisition programs around products targeted to the needs of these potential customers. Direct mail is a highly effective way to pinpoint marketing efforts, while attractive price offerings and premiums can be the cornerstone of an expanded, profitable range of customers. As always, knowing your customers' needs is the most effective way to earn and hold onto their business.