Customer Acquisition

How can I be sure I’m getting a decent payback for the money we’re spending to get new customers?

Properly executed, the customer acquisition process is a continuous improvement process that can substantially lower the cost of acquiring a new customer and geometrically increase their return in terms of lifetime value.

Business is simple. Peter Drucker said the only thing you have to do to be successful in business is get and keep customers. Simple, yes. Easy, no. Getting customers is tough and expensive. It can cost 5 to 15 times more to get a business customer than to keep one and it typically takes more than a year and a half to break even. So, what’s the trick? Continuous learning – the kind that results from implementing a measurable process that allows your organization to increasingly understand:

• What organizations and individuals to go after
• Which ones to cultivate and which ones to get rid of
• How to shorten the time it takes to get a prospect to buy
• How to get a higher percentage of prospects to become long term customers

When trying to acquire customers, it's nice to get things right the first time. But that seldom happens and even if it does, without a measurable process, you won't know how to replicate your efforts. Then again, even if the initial efforts are lacking, if they are done within a continuous learning and improvement process, you will get to the point where you can confidently and consistently hit your goals..

Lead Generation

We are all aware of products and services we never intend to buy. Yet a common trap is making “generate awareness” the objective of lead generation. Generating awareness is worthless and very expensive if it doesn’t result in long-term customers. To be effective, awareness generation must be approached as but one stage of a complete lead generation process that is:

• Tightly targeted at sets of prospects who have a greater need for what is being offered
• Based on quantitative measures such as “acquire 60 qualified prospects” or “convert 26% of all leads to qualified prospects
• Managed for continuous improvement

Incorporating insights into the characteristics and needs of qualified prospects enables each subsequent lead generation wave to be more effective and efficient, resulting in an overall higher return on customer acquisition investments.

In simple terms, the objective of lead generation is NOT to simply generate inquiries, based on volume. The objective of lead generation is to generate QUALIFIED leads, defined as prospects with a need for what is being offered and a higher probability of becoming loyal, long-term customers. Download a PDF article on this subject

Lead Management

It helps to think of a lead as a purchased asset that can either appreciate or depreciate. Leads are bought through investments in advertising, marketing, and sales activities. If properly managed, as leads move through the customer lifecycle, their value appreciates; more time and money have been invested and their likelihood of becoming paying customers increases. The purpose of lead management is to make sure that as many leads as possible convert to profitable customers without over investing. A lead management process accomplishes this by preventing leads from “falling through the cracks”, advancing appropriate leads, divesting of inappropriate leads, and learning how to target and qualify leads more precisely. Few processes are more important since, in addition to increasing the chance that acquisition efforts will produce an acceptable return, a well run lead management process greatly determines whether new customers will become long term, profitable customers.

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Prospect Cultivation

Few business-to-business prospects turn into customers instantly. Prospects may want time to be sure that your solution will produce the results they need. They may need time to sell internally. It might be they have to wait for the next budget cycle. Whatever the reason, if the investments made to generate leads are to be protected, there must be a deliberate process that ensures that the “seeds” planted not only survive but are nurtured into healthy “harvestable crops”. Prospect cultivation is generally a dialogue-based process whose purpose is to exchange value in the form of increasing knowledge, understanding, and trust. As these increase, both the seller and the buyer gain confidence about whether “doing business” is more or less likely. As with mutual funds, each category of prospect has a different potential return. And, like stocks, the sales and management costs shouldn't exceed the expected return. This is why the prospect cultivation process must enable alignment of the cultivation investments with the potential returns of specific prospects. Download a PDF article on this subject

Value Based Contact

As humans we interact by communicating. When the communications create value, relationships strengthen and produce the confidence and trust needed to make buying decisions. Prospects must receive value through interactions at each step of the acquisition process if they are to become customers or appropriately decide to “opt out”. Value based contact is how we refer to “connecting” with prospects at each touch in ways that are perceived as valuable. Assuming what a prospect values is a costly mistake.

The mistakes that come from assuming can be minimized by using processes that lead to greater understanding while guiding prospects through the customer lifecycle. The understanding of what prospects value in our communications includes not only the content (what information do prospects need; what aspects should be highlighted), but also an understanding of the media preferences (which content they’d prefer quickly and succinctly via email vs. content they’d like to discuss interactively via phone, for example). By better understanding the prospects’ needs and communication preferences and building them into each contact in the cycle, the effectiveness of acquisition efforts can be greatly enhanced.

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New Product Launch

New products are an essential component of customer acquisition and retention. For example, Hewlett Packard reports over 60% of orders are from products introduced in the last 2 years. 3M has reported 30% of its sales from products introduced in the last 3 years.

Despite the importance, most companies are not effectively launching new products. In fact, 70% of all new product launches fail in the first year (AC Nielson) and of every four products developed to full-scale, only one becomes successful (Booz, Allen, and Hamilton).

Today’s highly competitive and dynamic business climate requires new product approaches that are driven out of a deep, real-time understanding of the needs of specific segments of customers. Such a level of understanding seldom results from periodic “research events.” Rather, it develops as an outcome of day-to-day processes designed to build deeper and more responsive relationships.

Successful new product launches also require a diligent stage-gate process, which provides the key information needed to make appropriate decisions throughout the launch process. This begins with a collection of customer and market information; through the research and development process; to feasibility assessments and analysis; and finally into the sales and marketing launch process.

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Opportunity Management

Research across a variety of companies and industries shows that only 11% of qualified leads receive follow up. This means that for 100 qualified leads (each with average potential revenue of $10,000) $110,000 is earned in revenue and up to $890,000 is left on the table. Of course, it’s not as dramatic as this – because you’re following up on the “right” 11%. Maybe? Now add back the investment to generate, qualify and manage the leads, to the current and potential downstream value (how many of the 89% would have purchased in the future, with some investment in nurturing?) – and the financial implications of poor Opportunity Management become clear. An effective opportunity management process allows B2B companies to identify and respond to business opportunities quickly and appropriately, and ensure the highest conversion rate possible.

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Sales Funnel

You are generating healthy volumes of inquiries. Your field sales teams are coming home from trade shows and conferences with new contacts. Customers are e-mailing and calling in response to your website, mailings, and other communications. Incoming lead volumes are higher than ever – and yet your closed sales are static or declining. This is a common situation in the B2B environment and it is worrisome. Investments in generating leads are not providing returns if the leads are not converted into sales.

Sales Funnel definition and tracking provide visibility into the situation and provide a tool for managing and guiding the process. The Sales Funnel represents the steps and stages of your standard sales process. A tailored model, each company’s Sales Funnel is comprised of:

• Source tracking for each lead and opportunity entered into the sales process
• The stage gates which represent the evidence of progress through the sales process and defining moments within the sales process
• The key sales activities which are required to progress a lead through each of the stages

Diligent tracking of each lead and opportunity through the sales funnel provides key insights into the sales process:

• Identifies the sources (campaigns and activities) which result in the greatest number of opportunities and revenue
• Allows for ROI calculations, to make informed decisions on future lead generation investments
• Ensures that all leads are followed-up on, and do not fall through the cracks
• Provides information on average sales cycle
• Identifies any leads of opportunities that are “stuck” in the sales process, so that the organization can strategize and act upon these open opportunities
• Captures win and loss information, for refinement of sales approach and sales messages
• Provides the capability for forecasting and predicting revenue and sales volume Download a PDF article on this subject