April 01, 2009

Customer Acquisition: How? Now! And The Future

We've talked some about the two questions, coming from different camps:
  • Catalog Marketers: How are we going to acquire customers when catalog customer acquisition becomes too expensive and unproductive? How are the online folks doing it?
  • Online Marketers: How can we "detether" from Google, and start acquiring customers on our own? How do the catalog marketers do it?
If the internet were a baseball game, it would be entering the top of the third inning.
  • Top of the 1st = Dot.Com Mania.
  • Bottom of the 1st = The "Multichannel Era".
  • Top of the 2nd = Social Media & Social Networking, aka Web 2.0.
  • Bottom of the 2nd = "The Great Implosion", Global Economic Distress.
In the top of the third inning, marketers have figured something out. The secret to success, as it turns out, is the ability of a business to acquire customers in a profitable manner. It turns out that the "traditional" approaches, used by specific marketing genres, are not sufficient to grow a business.

It also turns out that nothing scales anymore. No one source, not even the big sources (catalogers = co-ops, online brands = Google) provide enough new customers to allow the business to grow. And it turns out that all of the micro-channels provide a micro-amount of new customers. Social media, in particular, has proven to be anything but a vehicle that drives new customers.

So the desperate plea from CEOs that inquire via my inbox is this ... "How do we acquire new customers ... NOW!!??"

We're in uncharted territory.

In so many ways, we're pioneers, taking the Oregon Trail out west. And when we get to the West Coast, we'll find that Seattle and Portland and San Francisco and Los Angeles and San Diego and Vancouver haven't been built yet. Traditional channels like catalog co-ops & lists are dying a slow death. Web 1.0 channels like paid search have plateaued for many. And emerging channels don't provide enough volume to matter.

In other words, it's our job to build the future.

The future requires that each company build a "prospect" list. This is old news to the catalog marketer, it is revolutionary to the online marketer.

The prospect list will have two components.
  1. "Known Prospects". We will work extra-hard to identify ANYTHING that we can about prospects. We'll link cell phone numbers, e-mail addresses, credit cards, physical home mailing addresses, social security numbers, cookies, post office boxes, work addresses, home phone numbers, user-ids, confirmation numbers, registration numbers, you name it. Each piece of information is gold, and we'll purchase information when we can to complement what we already know about a prospect.
  2. "Unknown Prospects". We're going to do just about anything in order for prospects to follow along, to become "fans". Think about the music industry --- there are bands that you enjoy listening to, though you've never purchased an MP3/CD, and you've never attended a concert.
Unknown Prospects are going to be a difference-maker in the future. This is counter-intuitive to the traditional direct marketer, one who always marketed to an existing customer or a known prospect.

We're going to see traditional direct marketers and online marketers morph into entertainment marketers. We'll see companies like Orvis (for example) offering multi-faceted entertainment programming. Think about the possibilities.
  • Traditional catalog marketing for the 55+ exurban/rural audience.
  • Classic e-mail marketing campaigns for the multichannel customer.
  • Online marketing tactics like paid search and affiliate marketing and portal ads.
  • Social media to connect fans to employees.
  • Advertising via cable, radio, etc.
  • The "Orvis Channel", a component of the website, offering original programming that exemplifies the Orvis lifestyle. Why advertise when you can produce your own programming? This programming will stream --- prospects can watch programming in real-time, or download programs at their convenience. Customers and prospects will be able to interact with the programming, making it different than watching a static episode of "ER", for instance.
Traditional conversion rate marketing becomes a thing of the past. We won't care that only 0.3832% of the audience of a show on the "Orvis Channel" purchased something. We will care that 148,903 prospects watched an episode on the "Orvis Channel", and that 20% of those prospects watched multiple programs, recruited other prospects, and eventually bought something eighteen months later.

The programs on the "Orvis Channel" will have a social media component to them, allowing prospects/fans to interact with other prospects/fans. There will be a viral component to this level of interactivity, generating conversation on other platforms. We won't care about having a Facebook or MySpace presence, we will care about having our prospects/fans evangelize our "programming" and merchandise outside of the "Orvis Channel" community.

We'll measure the process that a prospect goes through --- prospect to fan, fan to customer, customer to loyalist, loyalist to evangelist. Lifetime value will be the sum of future profits generated by a customer plus the sum of future profits generated by fans recruited by evangelists.

Is this futuristic? Maybe. Is this style of marketing becoming necessary? Probably. The future is all about acquiring new customers --- and the traditional, Web 1.0, and Web 2.0 methods of acquiring new customers are failing. We're going to need a new, sustainable approach.

What are your thoughts?


  1. One thing to not forget: retail stores still drive new customers (both online and off). I think an approach - even by current pureplays - that adds a few retail stores in critical markets that could drive awareness of the brand is a good step.

    Having said that, it's still always about the money. So in order to achieve what you have here, you have to be really, really sure of future LTV of someone consuming content. The further in the future the transaction is, the more static in that number and the harder to get right. Which means one little error in the calculation could have devastating ramifications to the business overall.

    And I think you're also discounting additional market share from current customers. I know this is hard, but so is adding far-in-the-future customers through entertainment content.


  2. The interesting thing is that this is already happening ... few people choose to measure it. Your site probably converts folks at a 3% or 5% or a 10% rate ... with a portion of the audience being "fans" who maybe only purchase once every ten or fifteen visits.

    The dynamic has been happening for fifteen years, our industry isn't good at measuring it.

    I've worked on projects where this is measured ... each unique visitor, on a first visit, is assigned a LTV based on the attributes of the first visit. There's profit to be had there, almost everybody fails to maximize it or think about the value of it.


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