Acquiring new customers is an essential element of business. However, cultivating customers from scratch is costly and may be a headache for many. Here are 4 steps to acquire new customers and tips for cost reduction.
Huge cost of acquiring new customers
Acquiring new customers generally costs a considerable amount of money compared to retaining existing customers. Even if you want to make sales efficiently with limited resources (people, goods, time, money), the difficulty of acquiring them is increasing year by year, which is also annoying to companies.
1 to 5 law” and “5 to 25 law
There’s a say that it costs five times as much as existing customers to acquire new customers. This is call the “one-to-five rule.” And new customers are usually consider to have a lower rate of return than existing customers.
On the other hand, the law advocated for retaining existing customers is the “5 to 25 law”. It is said that if you improve customer attrition by 5%, you can expect a profit improvement of at least 25%. Both laws are found by Bain & Company, a major American consulting firm, and are used in various business strategies
In order to acquire new customers, it is important to secure a considerable budget and to work according to the intentions of existing customers. This time, let’s take a look at the background of the times when it became difficult to acquire new customers and the steps to acquire them.
Advertising costs are one of the major cost factors for new customers. While TV commercials, newspapers, magazines, and Internet advertisements may be seen by an unspecified number of customers, the reality is that they are costly.
There are various types of advertising methods such as direct mail, public relations strategy, and web marketing represented by SEO measures, so it is necessary to find the method that can approach your customers most efficiently.
Increasing difficulty in product differentiation
In recent years, there are many mature markets, and product competition is intensifying due to the declining population. It is difficult to make a profit only by mere product specifications, price, and brand power, and it is thought that the difficulty of acquiring new customers is increasing accordingly.
In addition, the development of the Internet has made it possible for customers to collect information in various ways. It’s now easy to get a lot of information and compare it to the competition. As a result, it has become difficult to acquire new customers simply by running commercials or jumping into sales.
4 steps to get new customers
So what do you do to actually get new customers? Here are four steps that are generally required.
Research, find customers
First, identify the customer. You need to decide which industry and scale to reach and collect company information. Find the industry that needs your product and decide which company / customer to approach. Efficient sales can be achieved by setting rules and deciding customers in consideration of cost effectiveness, such as lowering the priority of customers who have strong relationships with competitors and are unlikely to close.
Approach the customer
Approaches to customers include marketing using tools such as diving sales, tele-appointment, and marketing automation. The key to increasing the acquisition rate of new customers is to take a complex approach according to your budget and customer characteristics.
Increase purchasing motivation
Few customers make a purchase decision just by talking to them once. Motivate your customers through a continuous approach, such as regular visits and post-appointment sales emails. By grasping the needs and worries of the customer at the time of appointment and sending not only the information with a strong sales force but also the information that the customer wants, it can be an opportunity for the customer to be interested.
We will increase purchasing motivation and receive orders by squeezing the amount and detailed conditions. When handing over to a sales person here, it is important to pass on the customer information obtain so far in detail. Even though the purchasing motivation has increased, if the customer’s motivation is lowered due to reasons such as “what I said before is not shared”, there is a risk of loss of orders.
Points to reduce costs in acquiring new customers
Although it costs a lot to acquire new customers, we want to reduce the cost as much as possible. What should I be careful about?
Perform highly accurate targeting
If you attack a list of customers from one end, it will take time to approach customers with a low probability of acquisition. First of all, it is important to analyze customer information and approach customers who are compatible with your company with high accuracy.
Centralize and manage information
If customer information and records of approaching customers are disjoint, it will be troublesome for sales staff to collect various information when visiting customers. Also, it is inefficient to refer to customer information in the same industry unless the information is centralize. Make good use of marketing automation and manage customer information.
Reduce sales work time
The number of customers that can be approached will be limited; If each person takes time to collect information and enter information in Excel or daily reports. By centralizing information and using easy-to-work tools, you can reduce your work time and reach more and more accessible customers.
Measure the effect
First, set a goal, measure the effect on that goal, and run the PDCA cycle as quickly as possible. By going through the PDCA cycle, you can clarify your goals and make it easier to understand future issues. By the way, the PDCA cycle is to repeat the following four steps.
Plan: The stage of setting goals and creating an action plan to achieve the goals. Do (execution): The stage of executing the goal or action plan set in Plan. Check (evaluation): The stage to evaluate whether or not the set goals and action plans have been achieved as a result of execution. Action (improvement): The stage of thinking about improvement points for the results of evaluation and analysis by Check.
In addition, the following four points are important for the effective execution of the PDCA cycle.
- Set goals using specific numerical values and make a plan as detailed as possible.
- Implement as planned.
- Make a reasonable plan.
- Evaluate and confirm regularly.
Utilize customer management system
It’s a good idea to use a customer management system to avoid the hassle of gathering customer information one by one from different locations and not spending time on extra work.
The customer management system collects customer information collected in the past in one place and centrally manages it, making it possible to easily share that information among the parties who need it, regardless of the department to which they belong. In addition, you can analyze centrally managed data and visualize issues from multiple perspectives. By analyzing and visualizing information in real time by the system, the PDCA cycle can be run at high speed.