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FEATURE STORY
Maintaining a Solid Customer Base Through a Targeted Customer Acquisition Program
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What does it cost to acquire a new customer and what is a smart acquisition strategy? Today, as the cost of switching brands becomes less of an issue for consumers and businesses, the cost of customer retention and acquisition continues to rise. Therefore, in order to get the most bang for your buck, it is important that your customer interaction programs be managed in the best possible way.
A recent poll of business executives revealed that the cost of customer acquisition was viewed as the most important metric when assessing the efficacy of marketing. Acquisition costs were deemed more important than cost per click, cost per lead, or cost per sale combined. Especially in low-margin businesses, where cost per customer numbers instantly show who is running the most efficient organization and who isn’t.
Unfortunately, many companies have only vague answers when it comes to questions about their own customer acquisition costs, and they're even hazier about knowing if those costs are changing and how their costs compare to their competition's. If, as they say, the cost of acquiring a new customer is five times the cost of retaining an old one, by understanding which customers are the most valuable, and which strategies and tactics are the most profitable, it is possible to increase brand and marketing performance by focusing investments in the areas that drive the greatest return.
This means developing prospect/customer acquisition plans for specific target customer groups or sectors. This strategy finds customers who will value your products and services as they are, rather than trying to change your offerings to please your current customers. Acquiring customers who are known to have a high average loyalty and eliminating acquisition efforts toward customers who are likely to quickly leave results in a customer base that is loyal and profitable.
Acquisition targeting does not require customers to change. However, it does assume that there is a universe of prospects that value your current product and service offerings. Clearly the core of a business strategy must be to provide differentiated products and services at competitive prices, so acquisition targeting won’t solve all your problems. But if one of your problems is that you are acquiring the wrong customers, this can be fixed.
Fortunately, when it comes to customer acquisition and direct sales management, contact centers remain the primary and most successful touch point strategy. Customer acquisition solutions can minimize acquisition costs through predictive analytics. For example, customer acquisition solutions can predict which marketing programs and campaigns will generate the highest responses. By delivering relevant and valuable information, customer acquisition programs help clients build prospect databases faster, learn more about their audiences, and generate more reliable leads from their marketing efforts.
Efficient customer acquisition plans require a prospect database and supporting processes in order to learn more about prospects and to reach them with the right message when they are most likely to purchase. Effective customer acquisition processes and a robust database will also help later in the customer lifecycle if the prospect becomes a customer as the information about the customer’s needs and preferences gathered during the acquisition phase can play a key role in retaining existing customers.
Customer acquisition contact center services can include prospect identification, campaign management, lead generation and fulfillment. In coordination with sales objectives, marketing campaigns can be implemented and executed using multi-channel communications in coordination with advertising and promotional sales programs. By tracking customer value over time against the cost of acquisition, it is possible to improve the quality and value of new customers while reducing the total cost of acquisition.
Customer Acquisition Cost
Definition
The cost associated with acquiring a new customer.
Information
Customer acquisition cost is calculated by dividing total acquisition expenses by total new customers. However, there are different opinions as to what constitutes an acquisition expense. Acquisition costs vary across industries and mediums. When acquisition data is available, try to determine if you are comparing apples to apples. This is not always easy, as customer acquisition data can be scarce.
Synonyms
Often shortened to acquisition cost
Related Terms
Conversion rate
Cost-per-action (CPA)
Cost-per-click (CPC)
CPM |
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