The phrase “customer acquisition” is a combination of two words customer + acquisition.
Customer- it can be any person of the market who is interested or can be interested in your product or services and is capable of buying it.
Acquisition- To convert any lead (Client Number) into prospect and then into customer/ client.
So customer acquisition, on a whole is a process of finding a customer into the market and selling him your products/ services. A customer can be new as well as old. We only have to see the fact that a Sale has been made for the company.
The complete report (profit report or loss report) of any company completely depends on Customer Acquisition. There are few terms which complete client acquisition.
These terms are as follows:
- Customer Acquisition Process
- Client Acquisition Strategy
- Customer acquisition cost
- Customer Retention
- Increase profit by Proper Customer Acquisition
Now let’s have a brief overview of the above terms
1. Customer Acquisition Process
It is a complete process of selling final product or service to the customer or client. Whether you have made a win-win situation or not but you got to be successful in selling. For implementing customer acquisition process effectively you must have to take care of following points
a) Make Right Product or service
For a long term benefit; you should always focus on making Right Products and Services with an intention to help customers. By making good products you can easily have a win-win situation.
b) Hire Right People to sell the Product or service
For capturing any kind of market, your sales team plays a very crucial role. No matter how good your product is,you can’t sell your product without the sales team. So always look for good sales people and also train them time to time.
c) Advertisement or Marketing in Right Market
Everyone knows something about marketing and only a few people know about marketing in Right direction or Right Market. Most of the People get confused between Branding and Marketing and waste their Budget of Marketing in wrong ways. Let me give you an example to understand properly about Right Market
Eg- You are a Real Estate Consultant then if you are advertising your properties on Dating Websites then it is known as the wrong market but if you are putting same advertising on investment blogs or Money making blogs then it is known as Marketing in Right Market.
d) Generating Leads
Leads play the same role in any business which Oxygen plays to our body. Without lead generation, you can never complete a sale. So never compromise on lead generation process.
e) Finding Right Prospects
Many times Sales People waste their time with the wrong prospect and this happens because they don’t analyse their clients properly. Let’s have an example
Eg- You are a Sales person of Mercedes Benz. Someone saw your product advertisement and dialled your number because he really liked the car. You invited him for the test drive and he says, “I can’t afford it.” But you have invited him to explain your EMI Plans. You keep on talking to him for many days to convince him and then after 2 months you come to know that he only earns Rs 70k per month.
So this is like working with the wrong prospect. In other words, I would say anyone who can’t buy your product or anyone for whom your product is of no use then that is known as Wrong Prospect because such people will never buy your product or services.
f) Explaining your product
It is something related to Hire Right People. It is a very important aspect which very few managers take care of. Always cross check your front line sales people on their explanation part of Product. Any sales person who cannot speak non-stop for 2 hours about the product then that sales person needs a training session. Just think why will someone buy an Apple Macbook Pro of Rs 1 Lakh when same features are available in Rs 50k if I go for Hp Laptop. It’s only possible when sales people of Apple are good enough to let me know what special Macbook Pro has in it. It will all depend on the way he explains me about his product and his services.
Every product is different when it comes to buying. We can buy a burger, clothes, small electronics etc on-spot. But when we need to buy some expensive products or services like home, employee training program, car etc then the buyer can never make on the -spot decision. So it’s the responsibility of a salesperson to keep reminding them in regular interval of time about his/her product or services.
h) Sell your Product
It is the last point of customer acquisition process. I have observed many salespeople who keep on talking about the features and qualities of their services and product but never ask the most important question i.e So when would I deliver the product? Or so when you are going to make final payment or let us close the deal etc. You are here to sell your product not to make friendship. So never forget about your main aim i.e. to Complete The Sale.
2. Customer Acquisition Strategy
deciding about how to execute customer acquisition process effectively to get a maximum result is basically known as customer acquisition strategy. The better you make the strategy the better your employee will perform and will generate larger profits. We should never ignore following points while making customer acquisition strategies:
- Role of Each Team member
- Total number of products that you have to sell
- Money you are going to involve in marketing
- Time to complete the target
- Deciding right Market for your product
- Revenue you wants to generate
3. Customer acquisitions Cost
This is the most important aspect which usually people don’t discuss and suffer the loss in their company. Startups do make this mistake. You have read or listened to the following sentences in news
Abc Company increased its revenue 5 times in last year but loss increase to 20 Times.
DEF company made a userbase of 1 million people last year but now is on the verge of shutting down.
If I talk about real life example then
According to financialexpress report, Oyo Rooms a Hotel Chain with revenue of Rs 14Cr has increased its revenue by 6 times but registered a loss by 17 times by making a loss of Rs 350cr in FY 2016.
Another report from techcrunch says Tiny OWL a food delivery startup of India failed in spite of $27 Million funding from Sequoia Capital.
Why does this happen?
This all happens when companies only plan about converting a sale or about selling their product or services without investing a single second on calculating customer acquisition cost.
Now, what is Customer acquisition cost?
It is the total about of money you have invested in any form (lead generation cost, travelling cost, employee cost, office cost etc) to bring a client or customer on board
Customer Acquisition Cost = Total Money Invested in any form / Total Customer associated.
From the company perspective, you should always work to reduce the Customer acquisition cost as much as possible.
4. Customer Retention
Selling the products or services to old customers in known as customer retention. Before going further you must read few interesting facts regarding customer retention then you will understand why it’s an important part of customer acquisition.
- If you increase customer retention by 5% your profit will increase minimum by 25%.
- You require 5 times more money to acquire a new customer compared to customer retention.
- There is 50% more chance that an existing customer will get ready for your new product.
- Customer retention saves half of your time and energy.
There are so many benefits of customer retention. But, still, 44% of the companies don’t give much value to customer retention and, they always run for new customers. So avoid making this mistake with your business.
5. Increase Profit by Proper Customer Acquisition
By Proper customer acquisition, I mean choosing right process and right direction to bring customers on board with maximum profitability. For generating more profit you should take care that Profit per Customer> Customer acquisition cost. To find Profit per customer you can apply following formula
Profit per customer = Total Profit Made/ Total customer
= (Total Revenue- Total Expenditure)/ Total Customer
I hope now most of your doubts are clear regarding customer acquisition. If you still have some doubts then you can ask me in the comment section. If you want me to write something about customer acquisition of any particular industry then you can let me know.