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Managing customer acquisition

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  • 1. Managing Customer Acquisition Akash C.Mathapati Akash C.Mathapati
  • 2. Definition• The acquisition transaction perspective says that customer acquisition ends with a customer’s first purchase• It includes the 1st purchase as well as other non- purchase encounters that both precede and follow the purchase, up until the time the customer makes a repeat purchase• Once a 1st purchase is made, a customer may request service or other activities that impose further costs, this is part of CA. Akash C.Mathapati
  • 3. Which firms should Emphasize Acquisition Firms need to direct some attention towards CA Optimal amount of the effort depends on a businesses ability to retain customers, its customers repurchase frequency & its relative opportunity to acquire Vs. retain customers CA  firms in new/ undeveloped markets in order to generate awareness and penetration of their products Akash C.Mathapati
  • 4. Developing a Customer Acquisition Strategy Pursuit of market share has driven the CA investment of the majority of companies Attitude has been to acquire as many customers as possible  E.g., AOL Few companies opt for selective CA policies  It assumes that not every potential customer is worth the CA investment Akash C.Mathapati
  • 5. The ACTMAN Model The ACTMAN: Acquisition Tactical Management 6 elements:1. Targeting2. Awareness generation and product positioning3. Acquisition pricing4. Trial5. Usage experience and satisfaction6. Post-introductory pricing and the creation of long-term value for the product or service Akash C.Mathapati
  • 6. The ACTMAN Model Product/ Product/ service service expectations experience Satisfaction Positioning RepeatTargeting Awareness Trial Value purchasing introductory Price Price pricing expectations Akash C.Mathapati
  • 7. TARGETING1st degree - Individual Customer Targeting (profiling)2nd degree – Segment Targeting3rd degree – Self-Selection TargetingAWARENESS GENERATIONDirect MARCOM  1st degreeMass communication  2nd & 3rd degreePositioning is the act of designing the company’s offering and image so that they occupy a meaningful and distinct competitive position in the target customers’ minds Akash C.Mathapati
  • 8. Acquisition Pricing Introductory prices should decline as a segments max retention potential goes up Introductory prices should be higher for price sensitive groups over time Special category of CA is reacquisition of lapsed or lost customers  Firms can set “winback” prices that are below offered to other acquisition targets Akash C.Mathapati
  • 9.  Trial  If product expectations are very high as a result of initial selling communications, and if the product fails to meet these expectations, the customer probably will not repeat-purchase, and the lifetime value of that customer will likely be low or even negative Akash C.Mathapati
  • 10. Usage experience and satisfaction- Product design and the provision of specified benefits- Post-purchase servicing of the customer Akash C.Mathapati
  • 11. Customer Acquisition Metrics No of customers acquired, track & match to co’s acquisition goals Acquisition rate – acquired customers to targeted prospects Cost of acquiring a customer etc Akash C.Mathapati
  • 12. Conclusion Managing acquisition strategies & tactics is vital to creating, sustaining, enhancing customer equity The ACTMAN model has long-term implications for the customer-firm relationship Any acquisition strategy that fails to consider its long- term effects on retention and add-on selling is incomplete Akash C.Mathapati