Strategy for Acquiring Customers

The Optimum Strategy for Acquiring New Customers: How to Discover and Implement It

By Michael Masterson

I believe that for every business, at any given time, there is an optimum strategy for acquiring new customers - and that the primary marketing obligation of the company’s CEO is to make sure that strategy is discovered and implemented.

What do I mean by an optimum strategy for acquiring new customers?

I mean a marketing and sales strategy that will produce the greatest long-term benefit to the company. Usually, that means finding and converting the greatest number of high-lifetime-value customers, i.e., customers who will continue to buy products from the company for years into the future.

Here’s an example…

Since its inception, EarlytoRise.com has recruited almost all its customers through Internet advertising. Of the many conversion strategies we have tested, two have so far proven effective:

Selling informational reports on other websites and then giving buyers a free subscription to our daily e-zine, which then sells them all sorts of "back-end" products
Targeting search engine users on a pay-per-click basis with a free special report, and then giving them a free subscription to the e-zine with its back-end selling

What we found - over and over again - is that those who had purchased our informational reports were worth considerably more over the long-term than those who had responded to our free report offers.

We tested three levels of pricing for the informational reports: $20, $50, and $100. By tracking the spending habits of each group, we found that the $20 spenders were each worth about $6 extra per year, while those who spent $50 were worth about $50 extra per year. Interestingly, those who spent $100 were no more valuable, in terms of back-end buying, then those who spent $50.

Based on those findings, we concluded that our best strategy was to sell as many $50 reports as possible.

I should mention that the strategy of converting pay-per-click responses brought in (and still brings in) many more names. But when we add up the net dollars we make through pay-per-click versus product buying, there is no contest. The product buyers contribute much more to our bottom line. That’s why we consider the first method, selling informational reports, to be our primary customer-acquisition strategy - and that’s why we devote more resources (time, intellect, and money) to it.

Because this is our primary strategy for attracting the kind of customers we are looking for, ETR’s marketing and editorial teams spend a good deal of time developing new information products to sell on the Internet. Most of their ideas come from the content of our daily e-zine - by carefully reading it and asking themselves, "Can any of these ideas be converted into exciting new information products?"

Coming up with new products to sell is critical, but it’s also important to figure out how we want to "offer" them to the marketplace. In traditional direct-marketing parlance, an offer consists of five things:

The product you are selling
The premiums that come with it
The price you are charging for it
The payment terms
A guarantee

We have learned from experience that the high-lifetime-value customers who come from ETR’s readership have typically responded to an offer for a product that will make them wealthier, healthier, or happier… so long as that product doesn’t cost more than $50 and comes with a strong, no-questions-asked, money-back guarantee. So that’s the kind of offer we construct when we test a new product in the marketplace.

But just because this kind of offer has worked in the past doesn’t mean it will always be the best offer. So we test different price points, payment terms, and guarantees on a regular basis.

We also test our marketing copy. We test headlines. We test leads. We test hard approaches against soft approaches, benefit-oriented pitches against idea-oriented ones. We test just about anything, so long as we think the element we are testing has a reasonable chance of increasing the response rate by a substantial margin.

Right now, in this market, ETR’s optimum customer-acquisition strategy is to create and market as many $50 information reports (with strong promises, guarantees, etc.) as we can on the Internet. But this may change. We might, for example, discover that we can bring in more names by taking the same lead-conversion strategy and testing it in the mail.

It would be foolish for us to believe that the customer-acquisition strategy that is working optimally now will always be the best one for us. Markets change because culture does. Some of the fundamental psychological principles will remain the same, but the individual elements of any marketing campaign will change over time.

Good marketers understand this. And that’s why they are always testing. The first thing you should do after you have discovered a great way to sell your product is to start working on another way that will one day beat it.

Take a moment, right now, to identify your company’s optimum customer-acquisition strategy:

What’s Your Primary Advertising Medium?

direct mail
direct e-mail
direct space (magazines & newspapers)
direct e-space (websites and e-zines)
telephone
radio
television

What’s Your Primary Lead-Conversion Strategy?

direct space to direct mail
direct e-space to direct e-mail
direct mail to direct mail
telephone to telephone
telephone to direct mail
radio to telephone
radio to direct mail
television to telephone
television to direct mail

Describe Your Offer

the price
the product
the guarantee

Describe Your Sales Copy

the big or overarching idea
the promise of benefit
the specific claims
proof of those claims

Once you have identified exactly what you are doing, you can start to think about how you can "test away from it." Spend some time brainstorming with your best people. Ask key questions, like:

What other products can we sell?
How can we make the offer more enticing?
How can we make the copy more compelling?
What other media should we test?

There are hundreds of ways a business can go bad, but only one sure way to make it better: Increase the number of good and profitable customers.

New customers bring new cash, and that cash that can be spent on anything your business needs, including better products, customer service, fulfillment, etc. You name it, cash and a little time will make it happen.

That’s why, at the beginning of this article, I said that discovering and implementing the company’s optimum customer-acquisition strategy should be the CEO’s top marketing responsibility. It’s that important.

This article appears courtesy of Early To Rise, the Internet’s most popular health, wealth, and success e-zine. For a complimentary subscription, visit http://www.earlytorise.com.

The Desperate Entrepreneur

By Marc Charles

"I have to make this business work."

That’s what Ryan, a desperate entrepreneur with a serious problem, said to me the other night. He had been referred to me by a close friend, and wanted some advice.

But Ryan’s business isn’t just in trouble… it’s gasping for its last breath of air. What he needs is business "triage" not "advice."

As he was describing his predicament to me over the phone, his kids were screaming in the background. And I thought to myself, "The first thing you need to do is find a quiet place to work - one that’s separate from your family’s activities." (For me, it was the local library - and, eventually, a small back bedroom… with a bolt lock.)

My heart sank for Ryan - because I know what it’s like to be desperate for answers to business problems when you’re just starting out. My problems may not have been as severe as his, but I’ve been there.

His main problem is that he is in no shape right now to receive my (or anyone’s) counsel. Not because I’m so wise and business savvy, but because he is so overwhelmed.

It would be great if Ryan could step back from and unemotionally contemplate his situation, handling the most critical problems first. But he can’t. He’s too upset.

What’s more, his wife is probably asking a lot of questions, his kids want all his attention when he’s home, and creditors are pounding on his door for money. On top of that (from what I could tell from our short conversation), his problems are much deeper than a temporary "setback."

Business failures are like heart attacks, usually a symptom of something that’s been going wrong over a prolonged period of time.

Anyway, Ryan asked if we could meet for "two or three hours" to discuss "everything."

I’ll help almost anyone when it comes to launching, running, buying, or selling a business. But I am convinced that the root of Ryan’s problem can be discovered in a matter of minutes - not hours. Determining the solution or course of action for him to take may take a little longer… but I wouldn’t be addressing solutions in our first meeting anyway.

I told him that though I wouldn’t be able to meet with him face to face, I’d be happy to assess his situation and recommend a course of action that should resolve some of his problems. But I said that before I could do that, he needed to send me an e-mail with three very specific things in it:

A brief overview of his business (target market, competition, sales, etc.)
An explanation of why he thinks his business is failing
Specific suggestions for what he thinks I can do to help him

I’m still waiting for that e-mail. Maybe Ryan will be in a better frame of mind to receive my advice when he hits rock bottom.

Had he taken me up on my offer, I would have looked at his expenses and studied how his sales are generated. In my 25 years of experience, I have found that the number one problem most desperate entrepreneurs have is a misunderstanding of the "first sale" principle (which you’ve probably read about in ETR many times).

Their second problem is usually that they are under water - with massive debt, expenses, payroll, collapsing trends, or a combination of all four.

One of the best ways I’ve found to control debt and expenses is to stop using credit cards for business expenses. There’s nothing inherently wrong with credit. But when we’re talking about a business that’s gasping for air… that calls for drastic action.

Most entrepreneurs don’t need nearly as much junk for their businesses as they think they do. Therefore, if your business is on its last legs, I’d suggest that you do without anything that’s not absolutely necessary… like fancy couches for the waiting room or engraved stationary or an espresso machine in the break room or mugs with your company logo on them.

The good news is that you can avoid ever getting to the point of desperation. Sure, businesses fail. That’s a fact of life. Changes beyond your control can occur overnight. But it’s what you do "between fortunes" that matters most.

You can hit two proverbial birds with one stone by understanding the wisdom of the "first sale" principle. It simply means that the first thing a new business must focus on is "making the first sale." Once you’ve made that sale, you can ascertain how it was done. And then you can put more effort into doing it over and over.

That’s why I’m such a big fan of direct marketing. It enables you to accurately track and analyze your sales.

As I said, the number one problem of most desperate entrepreneurs is that they have skipped over the "first sale" principle. Even if they initially generated impressive sales, they failed to figure out HOW those sales were made. So when the competition showed up offering better products or services at a lower price, they started losing sales.

Losing sales is not a big deal if you know how to generate more of them. You simply retool your marketing message and put it into the hands of qualified prospects. But if you’re losing sales AND you’ve got massive debt, overhead, bills, and a payroll to meet… that’s a recipe for becoming a desperate entrepreneur.

And when you’re desperate, it’s almost impossible to make wise, calculated decisions that will enable your business (and sales) to take off again.

I have a passion for helping entrepreneurs succeed. I’m convinced that there is hope for almost any situation - even if it means you have to throw in the towel and start from scratch.

By understanding the importance of that "first sale"… by understanding how and why certain products or services sell better than others… and - most important - by being open and ready to receive good advice, you can pull yourself up from even the most desperate position.

This article appears courtesy of Early To Rise, the Internet’s most popular health, wealth, and success e-zine. For a complimentary subscription, visit http://www.earlytorise.com.

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The Optimum Strategy for Acquiring New Customers: How to Discover and Implement It

This article appears courtesy of Early To Rise, the Internet’s most popular health, wealth, and success e-zine. For a complimentary subscription, visit http://www.earlytorise.com.

The Desperate Entrepreneur

Send mail to webmaster@infohatch.com with questions or comments about this web site. Copyright © 2004-2012 Infohatch by DMS, All Rights Reserved. Last modified: 01/29/12

Send mail to webmaster@infohatch.com with questions or comments about this web site.
Copyright © 2004-2012 Infohatch by DMS, All Rights Reserved.
Last modified: 01/29/12