New Customer Acquisition Presentation[1]

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Targeting the most desirable new customers is often missed in favor of throwing a non-selective, broad net. This brief presentation suggests approaches for acquiring the best prospective customers

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New Customer Acquisition Presentation[1]

  1. 1. Michael Lowenstein, PhD CMC Senior Vice President, U.S. Operations Customer Management Center of Excellence Customer Targeting and Acquisition: Essential Foundations of Loyalty and Profitability
  2. 2. What is CRM? <ul><li>CRM is exactly what it says it is: A single, integrated approach to customers and business strategy </li></ul><ul><ul><li>Customers - Potential, Present, Past, Internal/External </li></ul></ul><ul><ul><li>Relationship - All customers; mutually beneficial value </li></ul></ul><ul><ul><li>Management - Time, Money, Facilities, People, Technology, Strategy, Culture, Systems (Data Flow); and Sales, Marketing, and Customer Service Processes </li></ul></ul>
  3. 3. Do Companies Have A Single, Enterprise-Wide View of Customers Today? <ul><li>92% of companies say it is Critical (44%) or Very Important (48%) </li></ul><ul><li>12% of companies say they have it Fully (2%) or Somewhat (10%) </li></ul><ul><li>Source: Forrester Research, Inc . </li></ul>
  4. 4. Managing The Big Three: Acquisition, Loyalty and WinBack <ul><li>Acquisition Management – Targeting and attracting high-value prospects and turning them into first-time buyers </li></ul><ul><li>Retention Management - Strengthening relationship with current customers by increasing value; identifying/stabilizing at-risk customers </li></ul><ul><li>WinBack Management - Recovering lost customers and rebuilding relationships </li></ul>
  5. 5. Customer Targeting, Segmentation, and Communication <ul><li>Targeting - Those potential customers who lack experience with your product or service </li></ul><ul><li>Segmentation - Based on externally acquired data </li></ul><ul><li>Communication - Directed one way, toward the prospect </li></ul>
  6. 6. Interdependence of The Big Three <ul><li>Retention and Acquisition - Knowing which customers become loyal can help target better quality prospects </li></ul><ul><li>Acquisition and Retention - Knowing new customer needs helps customize products and services for higher value </li></ul><ul><li>Acquisition and WinBack - Comparing profiles of high value prospects against lost customers can help identify best potential former customers to recover </li></ul><ul><li>Beginning with Acquisition (New Customer) Analysis, look at - </li></ul><ul><ul><li>How they were acquired </li></ul></ul><ul><ul><li>How they are being serviced </li></ul></ul><ul><ul><li>What product/service needs are driving large/frequent purchases </li></ul></ul>
  7. 7. The Importance of Customer Lifetime Value <ul><li>Beginning with Acquisition (New Customer) Analysis, look at - </li></ul><ul><ul><li>How they were acquired </li></ul></ul><ul><ul><li>How they are being serviced </li></ul></ul><ul><ul><li>What product/service needs are driving large/frequent purchases </li></ul></ul><ul><li>Continue for Retention and WinBack Analysis </li></ul>
  8. 8. Moving Beyond Past Purchase Data to Customer Lifetime Value <ul><li>The best decisions for maximizing return on customer relationships will come from evaluating interaction of Acquisition, Retention, and WinBack </li></ul><ul><li>In addition to purchase history, look at - </li></ul><ul><ul><li>Emerging customer potential </li></ul></ul><ul><ul><li>Demographic/lifestyle factors </li></ul></ul><ul><ul><li>Overall relationship + key elements of relationship with supplier </li></ul></ul>
  9. 9. Targeting Prospects With Strong Loyalty Potential
  10. 10. Attract the Best Prospects <ul><li>The right customers are : </li></ul><ul><ul><li>Within a defined niche, around which the business model is built </li></ul></ul><ul><ul><li>Within clients and industries that match your firm’s vision and expertise </li></ul></ul><ul><ul><li>The most profitable </li></ul></ul><ul><ul><li>Prospects for repeat/cross-sold business </li></ul></ul><ul><ul><li>Those that need your capabilities and will let you do your job </li></ul></ul>
  11. 11. Also…………….. <ul><li>They need less direct incentive to purchase </li></ul><ul><li>They are more resistant than others to competitive claims and attempts to lure them away </li></ul><ul><li>They are less price sensitive </li></ul><ul><li>They are more accepting of occasional value delivery lapses </li></ul><ul><li>They are more positive about ‘their’ brand </li></ul>
  12. 12. Identify Customers You Don’t Want <ul><li>Price Grinders - Customers who apply pressure for initial-sale low prices </li></ul><ul><li>Chronic Defectors - Customers who often pull their business without reason </li></ul><ul><li>Discourteous Jerks - Chronically rude and verbally abusive customers </li></ul><ul><li>Pushers - Switch suppliers with haste </li></ul><ul><li>Misfits - Customers who don’t align with capabilities </li></ul>
  13. 13. Most Companies Overemphasize Acquisition <ul><li>Studies show that 80% of companies spend too much of marketing budget on customer acquisition (Acquirers) </li></ul><ul><li>- About 10% spend too much on retention (Retainers) </li></ul><ul><li>- About 10% are Profit Maximizers, balance </li></ul><ul><li>between acquisition and retention </li></ul><ul><li>Source: Prof. Adrian Payne, Cranfield University, U.K. </li></ul>
  14. 14. Why Does This Happen? <ul><li>- Belief that existing customers will be retained; company needs to focus on acquisition </li></ul><ul><li>- High churn rate/”leaky bucket” </li></ul><ul><li>- Customer acquisition reported regularly to analysts/share holders/senior management; churn may/may not be reported </li></ul><ul><li>- Lifetime value profit impact of lost customers not reviewed </li></ul><ul><li>- Sales force/senior management compensation based on acquisition, not retention </li></ul>
  15. 15. So, What is The Most Appropriate Way to Approach Customer Targeting and Acquisition?
  16. 16. Conduct Original Prospect Research <ul><li>What care/value do targeted prospects want? </li></ul><ul><li>What relationship channels do they want? </li></ul><ul><li>- Telephone Call Center(s) </li></ul><ul><li>- eMail/Mobile Devices </li></ul><ul><li>- On-Premise Customer Service Representative </li></ul><ul><li>- Field Service Representative/Sales Representative </li></ul><ul><li>- Customer Self-Service on Web Site/Knowledge Base </li></ul><ul><li>- On-line Chat </li></ul><ul><li>- Message Boards/Instant Messaging </li></ul><ul><li>- FAX </li></ul><ul><li>How well does company match relationship and value offerings with prospect needs? </li></ul>
  17. 17. Develop and Build Products/Services With The Right Customers In Mind <ul><li>Geographic differences </li></ul><ul><li>Demographic/lifestyle differences </li></ul><ul><li>Branding decisions </li></ul><ul><li>Customer on-line/off-line experiences </li></ul><ul><li>Bottom Line: Positioning/Value Proposition </li></ul>
  18. 18. Staffing Considerations: Matching Employee Skills With Customer Needs <ul><li>Getting close to the customer for personal components of CRM </li></ul><ul><li>Alignment of attitudes, proactive and anticipatory capabilities </li></ul><ul><li>Targeted education, training, teamwork, reward and recognition </li></ul><ul><li>Though painful, may require some culling of staff for better matching </li></ul>
  19. 19. Avoiding the ‘Casanova Complex’ <ul><li>Causes </li></ul><ul><ul><li>Compensating salespeople, and other staff, based on new customers brought into the company </li></ul></ul><ul><ul><li>Promotional programs for attracting new product/service triers </li></ul></ul><ul><li>Avoidance </li></ul><ul><ul><li>Carefully audit sales and promotional programs </li></ul></ul><ul><ul><li>Track loyalty of customers recruited through sales and promotional offers </li></ul></ul>
  20. 20. Work for Referrals, the Best Source of New Customers <ul><li>Nurturing and leveraging word-of-mouth </li></ul><ul><li>Listening to your customers </li></ul><ul><li>‘ Viral Marketing’ techniques </li></ul><ul><ul><li>Community - Chat rooms, message boards, newsletters, e-mails, etc. </li></ul></ul><ul><ul><li>Friend-Get-A-Friend, and other referral incentive programs </li></ul></ul>
  21. 21. Turning Targeted Prospects Into Triers <ul><li>Requires patience and diligence </li></ul><ul><li>Requires higher level value perception </li></ul><ul><li>Customers more wary and selective </li></ul><ul><ul><li>Information availability and access - Multiple sources (Internet, cable television, standard print and electronic media) invites more comparison shopping </li></ul></ul><ul><ul><li>Time pressure and the need for speed - The ‘hurry-up’ society </li></ul></ul><ul><ul><li>Overpromise and underdelivery intolerance - Higher customer expectations </li></ul></ul>
  22. 22. Next Stage: Triers Become Repeat Customers.......Or Defect (And Have To Be Won Back, If Desired)

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