4 Key Components to Acquiring New Customers
Last month we talked about the importance and value of investing time and resources into retaining existing customers as a strategy for business growth. In this second part of the series we discuss some strategies on acquiring new customers.
Customer acquisition is the lifeblood of any company, small or large. However, despite all the sales and marketing tools that exist today, many SMEs struggle to attract new buyers for their products and services. What separates the companies that outperform their competition at customer acquisition?
Enter...the ‘Buyers Pyramid’ - a principle created by marketing and sales expert Chet Holmes.
According to Holmes, one of the most common mistakes business owners make all the time is that they only sell to the very top of the pyramid which represents just 3% of the market; and ignore the remaining 97%.
The pyramid divides buyers into 5 categories; the two at the top cover 10% of the people who are actively looking to buy right now or are open to doing so in the near future. Below them are two more categories covering 60% of people who aren't looking to purchase anything right now or probably never will.
Let’s break it down further:
At any given time only 3% (also known as the top tier - every seller’s dream) of the marketplace who you are selling to is interested and ready to buy what you have to offer. It makes sense to focus on them. The problem with this is that you are operating in a really competitive space and it’s challenging to ensure that your brand stands out amongst all the other brands trying to gain a share of the same 3%. Those customers are also likely to choose someone they already know. And to develop a relationship like that, you need to start earlier in the process, further down the pyramid. This is why it might be more lucrative to widen your focus to the other 67% - a market that is currently untapped! [For the purposes of this piece, we’ll ignore the bottom 30% tier.]
The 6-7% tier are your ideal customers and potential clients. They are open, interested and capable of buying but may have questions about your product and are unsure where to find the answers. Therefore, you need lead generation to make them aware of the offerings you have. The sad truth is that only very few of the business owners and entrepreneurs are actually doing this.
The higher 30% tier represents your warm market. These types of buyers are somewhat interested and could be convinced may be with a free trial, short -term discounts, exclusive offers, and so on to start with. They could be persuaded with follow-up campaigns to remind them now and then about the products and services you offer.
The middle 30% are the buyers who “think” or “say” that they are not interested. It is unclear to this group of people why they would need your product or service but there is an opportunity here. Here you can curate long-term marketing campaigns with consistent follow-ups that highlight the value you have to offer.
The bottom 30% are much less likely to ever buy your products or services so it would be wise to maximize your efforts on the other tiers.
It is important to note that marketing to the 67% (i.e. the three middle tiers) is a long game and they may not be as receptive to your offers as the top tier; the secret is to meet them where they are.
For this group, you will get much better responses when you GIVE first. Give them good information (for free) to help them with their problems and you can move them up the pyramid, step by step. While there may not be an immediate payoff, if you take time to build and cultivate the relationships there is much less competition. You will either convince these people who are going to buy one day to buy from you, or convince people who don’t think they need your product or service that they actually do.
Here are three more strategies you can leverage when it comes to customer acquisition:
Focus on Being ‘Found’ and not just ‘Finding’ New Customers
Customer behaviour and buying habits are constantly evolving. Now more than ever, they are leveraging the power of technology to educate themselves about issues, solutions, and suppliers before engaging with companies or their products and services.
Boost your brand’s digital presence. The pandemic has accelerated the need for business owners to increase their visibility online. Make sure that you are up-to-date and level up on all your communication touch-points. This includes your website, email marketing and using social media channels.
Raise your profile. Showcase your industry expertise to generate interest, build authority and position the brand as thought-leader in the space
Leverage Pre-existing Relationships
Current customers are one of the best sources of new ones. Never underestimate the value of ‘Word of Mouth’. Referrals are the one powerful tool for transferring earned trust from a customer to a prospect.
But you can’t be passive and wait for them to bring colleagues, friends, and family to your business. Instead, take control and create a systemized approach to actively solicit referrals from your satisfied customers.
And remember to reward those customers for their support; for example, you can offer discounts on future purchases, invite them for exclusive product pre-launches [COVID measures permitting of course], or give away something for free.
Cultivate Business Networks
There is no better way to raise brand awareness than meeting new people.
Partner with complementary businesses. A smart way to attract new customers is to team up with a business that has a similar customer base but is not directly competitive. For instance if you sell healthy snacks, working with a fitness company could be a great partnership.
Consider joining a trade association, a local chamber of commerce or other networking organizations. But rather than use these spaces to sell, position yourself as someone offering support.
As with all effective ventures, the key to long term acquisition and retention of new customers to plan the work and work the plan. A narrow focus on just 3% will not fulfill the organization's full growth potential. With the right mix of tactics and guidance, your business can continue to reach new consumers and retain them for the long-term.