Marketing Measurement Systems 5

The fifth consideration in developing Marketing Measurement Systems for your business:

5. Manage the cost of new customer acquisition, cost of losing customers and implement a Customer Acquisition/Retention plan.

Consider this: Customers are Assets of your business, revenue-producing assets. Some businesses actually lose money on the initial acquisition because once the customer becomes active, the Lifetime Value is very profitable and the downstream revenue opportunity makes it worthwhile to lose money on the first sale.

Customer retention usually costs a lot less than acquisition. So before you spend money on new customer acquisition, focus on retaining the customers who are loyal to your company now. Customer retention is about taking care of your customers so they will stay with you. Doesn’t it make you mad when a business offers something better to a new customer than to an existing customer? What message does that send?

New customer acquisition programs may include:

1. Direct Mail- standalone pieces, postcards, catalogs, Valpak, newsletters
2. Direct Sales- “door knocking” & calling
3. Internet advertising including pay-per-click
4. Telemarketing  (B to B) for sales & lead generation
5. Advertising- Newspapers, Magazines, Radio, TV, Internet, yellow pages
6. Digital media- CDs, DVDs, flash movies
7. Public Relations- almost free but you need a disciplined approach
8. Loyalty programs- offer incentives to become part of a program
9. Trade Shows- expensive, big exposure
10. Community/Charitable Initiatives- giving back may get customers

Costs of customer acquisition must be measured by selling channel and the costs may be dramatically different. For example, if a direct sales representative brings in a new customer, the acquisition cost could be higher than if a new customer was acquired through an internet lead or direct mail piece. Of course, the customer lifetime value could be different as well. This knowledge may cause your business to segment new customer acquisition programs by potential customer size/opportunity.