Pretty simple right? You would think so if you could read minds, predict the future or had the power of persuasion over others. It would be SO simple if you could somehow control your potential customers. You could try practicing some mind probing techniques to learn what they want, when they want it and how much they are willing to pay for it. Then you could customize your product or service to meet their needs. But…unfortunately that’s not how it works.
So what is the next best (sure) approach to finding customers and convincing them that you have the product or service for them? The safest most secure approach is the DIRECT approach. However, in order to take the direct approach…you have to first know who your target customer is, ensure that they want what your are selling and know what they are willing to sacrifice to have it. If you do not know any or all of these answers, you are literally taking a shot in the dark at trying to build your customer base.
Cost of Attracting Customers
We’ve all heard the saying…”it takes money to make money.” Attracting customers is a cost that should never be overlooked. Spending money is a basic fact of business. If you don’t spend any money, you won’t be making any. Before you spend money however, you have to know who your customer is.
There are 4 stages that customers go through in the buy-in process. First is the awareness stage. Awareness is critical to customer acquisition. If your customers are not aware of what you have how are they going to buy from you. Awareness is achieved through advertising. Advertising cost dollars.
Once you know who your customer is and have made them aware of your product or service, you now have to educate them, engage them and entice them to accept and buy what you are offering.
ROI vs ROO
Not everything can be measured in terms of Return on Investment (ROI). Sometimes cost/revenue tradeoff is not always black and white. Return on Opportunity (ROO) will many times produce a much higher return than ROI. When evaluating the cost of customer acquisition keep in mind not only the immediate revenue return but also the long-term return, whether it be in revenue or opportunity. Sometimes the opportunities opened up may outweigh the dollars spent today ten times over.
It’s all about Gaining Market Share
At any given time, 3% of your marketplace is in active buying mode, another 7% who would be interested if the right offer came along, and the remaining 90% are just not interested at this time.
Chances are you are not in a position to capture the 3% of your market if you have not been actively in the market. You have to ask yourself is it worth lowering your price or giving away the farm to compete for the other 7%. Positioning your company in the minds of the 90% for when they are ready to buy is where your marketing and advertising dollars should be spent.
Customer acquisition is a science. It takes extensive research and strategic planning to tailor a program designed to capture the most customers for the dollars available to spend. The biggest risk to any business is to spend NO time or dollars on customer acquisition. Because after all, Without customers…There is NO Business!
The Entrepreneurial Prosperity Program (EPP) is a one-on-one coaching program designed to guide small, start-up and medium sized firms through the strategic business and marketing development processes.
A division of DAVNA Enterprises, LLC, EPP was developed as a one-stop informational portal geared to provide small and start up businesses with all of the strategic tools and guidance, information and resources needed to successfully launch and grow their businesses.