January 18, 2010

Online Marketing Simulations: The Secret!

Recently, we worked through a spreadsheet exercise (e-mail me for a copy of the spreadsheet) that illustrated how hard it was to make sure that good customers stay good customers.

In fact, it is very, VERY hard to keep a customer for life. Customers evolve and change. You enjoy every moment the customer wishes to share with you, then you let the customer go and find a new one to replace her.

Just look at how important customer acquisition is in the spreadsheet. Enter "0.00" in cells C6 - G6 ... by year 5, a $63,000,000 business becomes a $28,000,000 business.

In other words, you can focus on customer retention until the cows come home, but it is customer acquisition that, for all businesses except maybe Wal-Mart, Target, McDonalds, and Starbucks (and other businesses of their scale), fuels the future success of the business.

Almost nobody talks about finding new customers. This means that few people have discovered "the secret" to a healthy business. Why can't you apply "the secret" to your business, before others discover it?

Find new customer sources that have positive traits:

  • Customers who purchase multiple items on a first order.
  • Customers who purchase from multiple merchandise divisions on a first order.
  • Customers willing to pay full price on a first order.
  • Customers willing to pay for shipping.handling on a first order.
  • Customers who buy expensive, not discounted items.
  • Customers who are likely to purchase again in the next twelve months.
  • Customers who are likely to buy from another advertising micro-channel in the next twelve months.
  • Customers who buy from your brand (i.e. your website) and not from your brand via another brand (i.e. Amazon, Affiliates).
  • Use Online Marketing Simulations to identify these traits in new customer acquisition sources, and grow your business!

Click here to buy the book, "Online Marketing Simulations". Click here to hire me for your OMS project!