April 21, 2011

But How Do I Acquire A New Customer?

New customers.

It's not easy to find new customers, is it?

There are many, many methods for acquiring new customers.  Let's think about a few methods.

Buying Customers:
  • This takes many different forms.  Catalog marketers pay Abacus $0.06, +/-, to gain one-time access to a name/address, then mail a catalog to the customer.  An online marketer pays Google $0.50 for clicks that appear after paying for the right to appear on a search page.  A car company pays CBS $300,000 for a thirty-second commercial.  Buying customers is easy, and it is costly.
  • Think Verizon.  They offer you a new product (the iPhone), and they steal market share from AT&T.
  • Eddie Bauer expands into Outlet stores in the 1990s, giving them access to a demographic/psychographic that wouldn't normally shop a full-price store.
  • You are reading this blog via permission, right?  You subscribe via RSS or E-Mail, and as long as I don't mess up, you give me permission to continue to speak with you each week.  Permission is a front-loaded marketing tactic ... you invest time instead of money, with the hope of long-term payback.  Permission doesn't boost quarterly numbers, does it?
  • Microsoft expands into Retail stores in malls, offering products to customers that might not normally purchase the products.  Expansion into channels can be expensive ... expansion into retail saddles one with debt.
Word of Mouth:
  • This is the opposite of expansion into Retail.  Retail, you see, is what I call a "high probability event".  Open a store, customers arrive.  Of course, you pay a dear price for access to a high probability event, often resulting in crippling debt.  Word of Mouth is opposite, what I call a "low probability event".  There is no "best practice" for something becoming viral ... for every Facebook, there are tens of thousands of social networks that may be better, but never gain traction.  For every Angry Birds, there's thousands of games, many better, that go nowhere.  For every Rebecca Black, there's ten thousand artists with infinitely better music that go nowhere.
So much of what we're being taught today are methods to use technology to increase the likelihood of success in a low-probability event.  If we just follow best practices, if we just use technology and be authentic and be great, if we just encourage "engagement", everything will take care of itself.  Instead, all we are doing is improving the probability of success from 1 in 1,000 to 1 in 950.

This is why the vast majority of people dabbling in social media report almost no success.

If you want to acquire a new customer, consider the tactics available to you.  Are you paying up-front with money?  If so, you are likely to acquire a new customer, at significant cost.  Are you paying up-front with time/permission?  If so, you are not likely to have short-term success.  Are you pursuing a low-probability event?  If so, you are not likely to ever have success, but if success comes, it's gonna be fantastic!


  1. Hi Kevin:

    Thinking about permission based marketing and what you call "low-probability event"...

    I like using current customers and immediate circle of influence in the network to get new customers as a starting point. Use emails, social media channels to answer their questions, support customers, and the traction helps in making word of mouth stronger.

    Another idea is to engage in the activities and interactions that is of high interest to a target market segment. Use that to cultivate branding, add more to permission database that I could cultivate with email, social media or other channels.

    What do you think?


  2. The ideas, of course, are great.

    In practice, they are low probability events. When they work, they generate 1% or 2% sales increases, which of course is fine, that's a good thing. One in ten thousand work so well that you end up with Groupon.

    My clients are looking to grow by 10% or 20% next year. This is why I call the events "low-probability events". There is an exceptionally low probability that the business will grow by 10% or 20% in one year, using the techniques. The techniques are good, but are in a different class from renting a name and address for $0.06 and sending a catalog to the rented name, which is almost guaranteed to produce sales.

    None of the techniques are good or bad, they just "are what they are".


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