It’s impossible to overestimate the importance of having an effective customer acquisition program in place. Here are four tips to kick your retail customer acquisition efforts into overdrive:
Know Thy Customer
A key success factor is to collect information about your customers throughout the path to purchase – when they buy, what they bought, and why they bought. Use internal and third-party consumer data to develop profiles of your best customers that include demographics, preferences, behaviors, and average lifetime value and use this information to guide your acquisition strategies. This insight will then allow you to develop personas of the customer look-alikes that you would like to target.
Another important benefit of knowing your customers is that you’re able to understand how and when they make purchase decisions. Mapping of the customer journey can help your company to move customers along the path to purchase by enabling incentives and removing barriers in the purchase process.
Finally, by combining customer information with predictive modeling, you’ll be able to turn a group of prospects into actual customers. More specifically, by modeling response behaviors, such as customer inquiries and purchases, you can use the power of statistical analysis to identify those prospects that are most likely to buy.
Measure Your Programs
As is frequently stated, you can’t manage and refine a retail business strategy if you don’t measure it. And customer acquisition programs are certainly no exception. To objectively evaluate the success of your customer acquisition efforts, it’s important to consider two key measures – average customer lifetime value (ACLV) and Customer Acquisition Cost (CAC). In its simplest form, ACLV is the average purchase amount multiplied by the average number of purchases that a customer will make. CAC is the average cost of acquiring a new customer and is calculated by dividing the total amount you spent on acquisition marketing in a period of time by the number of new customers you gathered during that same time.
The most effective customer acquisition programs have significantly higher average customer lifetime values than average customer acquisition costs. Ideally, the ACLV/CAC program performance ratio should be considered in an ongoing way across key customer groups, channels, and campaigns to provide insight into what is working and what is not.
Some additional measures of acquisition programs include total net number of new customers, ROI of advertising and marketing efforts, as well as the total revenue and initial/first-year profitability of new customers. Once you’re armed with these measures you’ll be better prepared to take appropriate action to optimize your customer acquisition efforts.
Constantly Experiment and Test Strategies
I always recommend that retail companies experiment and test different techniques and use what is learned from those experiences to develop go-forward strategies. In theory, testing of different acquisition methods is very simple. It’s presenting prospects with different marketing messages to see which ones produce the higher response rates. Different aspects of the message (e.g. headline or call to action) can be varied and tested to produce better and better results. Using this “Champion and Challenger” process you can determine which message/approach is better, and subsequently develop follow-on tests to further improve the message again and again leading to substantial incremental sales growth.
Vary and Combine Acquisition Methods
Diversification in acquisition marketing is important because it reduces risk and provides multiple avenues for experimentation and insight about what works and what doesn’t for your particular business. Leveraging and combining multiple approaches will further enable your ongoing war to gain new customers.
For example, the combination of traditional direct marketing with social networking can deliver significantly higher levels of quality traffic for low overall cost. Integration of social media with other proven response channels, such as direct mail has become much easier with the use of personalized landing pages, offer tracking and digital printing techniques. This synergy allows recipients to quickly take advantage of your offer, seamlessly share it with others enabling you to gather more new customers, faster and at a substantially reduced cost.
Customer acquisition creates a lifeline of sales that are critical to a company’s long-term financial success. Try to integrate these tips into your marketing plans and you will be destined to win the war on customer churn and amp up your acquisition efforts.