September 18, 2012

Forecasting 2013: New Customers

Remember, yesterday we looked at a business that moved from $77,000,000 to $80,000,000 by somehow increasing customer loyalty by 10% (never mind the fact that if we could increase customer loyalty by 10% we'd already be doing it, because that's a necessary part of our job, right?).

Here's the same business, with a 10% increase in new customers.
Pretty much the same outcome, right? (By the way, click here to contact me to get a copy of the worksheet).

Now, you spend every single day trying to get customers to become more loyal, and you almost never succeed.  Ever.

Or, you can go out and spend more money, expending almost no work whatsoever, and grow the business by the same amount.

Now, this becomes a disease, of course.  Just ask any cataloger that is now married to the co-ops.  It's a drug that you can't get off of.

The secret, of course, is to change the mindset of the organization.  If you aren't a ten billion dollar a year company (most of you aren't), then you have an enormous stream of new customers to acquire.  New customer acquisition should be like your 401k account, you don't put all of your stock in Microsoft, you diversify.  So you should diversify the sources of new customers ... co-ops, paid search, print ads, email, public relations.  Each sub-specialty (omnichannel, to use the parlance of the day) serves a purpose, and helps generate new customers.

Merchandise is critically important.

We simply don't think enough about the importance of merchandise.  I mean, honestly, what are customers buying from us?  Merchandise?

So we have to make it easy to a new customer to buy from us.  We don't necessarily have to pack 128 pages of merchandise on print, or 4,398 skus all searchable on a website, to get a new customer to buy from us.  Maybe we just need one key item, at a great price, with free shipping and free returns ... you know, something to knock down all of the barriers to purchasing.  Then, you've acquired the customer, and you test which marketing techniques (catalogs, email, whatever) the customer is receptive to, put the customer in that swim lane, and move on.

I've worked with close to 90 companies since founding MineThatData.  Maybe 10 of the 90 companies are experiencing breakthrough growth.  Almost all of those companies have robust customer acquisition programs, many have iconic items at introductory price points for new customers to try.

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