Want to avoid becoming a dinosaur? You'll need a low-cost customer acquisition program, no two ways around it.
Think about this for a moment. Your creative team does an amazing job of displaying one of your widgets. The widget looks beautiful, compelling, a must-have if there ever was one. A customer in Albany loves it, too, causing her to post an image of the item on Pinterest. There, on Pinterest, another individual also loves the item ... and Pinterest ... PINTEREST ... feels like they deserve to be compensated for helping spread the word on your behalf. If you want access to this customer, a customer generated because of the brilliance of your creative team (mind you), you need to pay Pinterest for this unique opportunity. That's called a "toll". Tolls lower your profit per new customer, and consequently, lower your overall profitability.
There's Macy's, always scrambling to play catch-up to others, focusing on omnichannel to a fault, obtaining few or no additional new customers in the process, while their hated rival (Nordstrom) acquires a half-million or more new customers a year through Nordstrom Rack stores. Sure, Nordstorm has to tack on a veritable plethora of fixed costs to build out these Rack stores ... but the strategy of realizing that the middle class is gone and the way to find new customers is to offer something that a lower-middle-class person can afford yields dividend, more than covering the fixed cost infrastructure necessary to build the customer acquisition platform.
See, a company like JCP, or Macy's, or J. Crew is facing a challenge ... their source of new customers come largely from middle class or upper-middle class customers ... the quantities of which are in decline. They can choose to acquire new customers through great merchandise (they all sell essentially the same stuff as the competition sells), they can attempt to acquire new customers by integrating channels (never seems to work, ask Circuit City, Borders, and countless others including J. Crew and JCP and Macy's), or they can follow customers into the economic toilet by offering a merchandising assortment that a lower-middle-class customer can afford.
Macy's chose omnichannel, years ago ... and are stuck in a rut today because of this attempt at acquiring new customers.
Nordstrom full-line stores are not growing, in quantity or in sales ... but their decision years ago to acquire new customers via Nordstrom Rack yields huge benefits today.
Make the right choice today, and you benefit in 2020.
Which brings us back to Mega-Trend #2:
- How Will We Acquire A New Customer In 2020?