Customer Acquisition and Management in CRM

Customer Lifecycle

  • Represents the stages customers undergo in their relationship with a company.
  • Viewed from the company's perspective.
  • Includes strategies for moving customers through three main stages: Acquisition, Retention, and Development.

I. Customer Acquisition

  • Initial stage of the customer lifecycle.
  • Formulates strategies to target potential customers:
    • Selection of target demographics.
    • Approach methods tailored to these groups.
    • Types of offers to attract them.
  • Crucial during product launches and new business startups.
  • Focus on acquiring profitable customers is fundamental to CRM strategy.
    • Success measured by Customer Lifetime Value (CLV).

Importance of Customer Replacement

  • Even with effective retention plans, customer acquisition remains essential:
    • B2C: Customers may transition out of targeted demographics due to aging or shifts in personal needs.
    • B2B: Customer loss can occur due to mergers, changes in supplier preference, or business closures.

Creating a Customer Acquisition Plan

  • Identify targets: Prospects to be aimed at.
  • Define channels: Strategies for reaching these prospects.
  • Specify offers: Types of incentives for attracting new customers.

II. What is a New Customer?

  1. New to the Product Category
    • Highlighted by changing customer needs or discovering new solutions.
    • Examples:
      • B2C: New parents needing baby products.
      • B2B: McDonald’s entering the coffee market.
  2. New to the Company
    • Gained from competitors due to better solutions or preference for variety.
    • Recruitment can be costly, particularly in saturated markets.

III. Prospecting

  • Definition: Mining term for searching valuable opportunities; CRM context for identifying potential customers.
  • Key Step in Sales:
    • Develop a database of potential customers and engage them to convert from prospects to actual customers.
B2B Prospecting
  • Definition of Leads: Individuals or companies deemed worthwhile for contact.
    • Generated by marketers and followed through by sales teams.
    • Channels include DTC approaches (direct sales) and indirect options (mediated contacts).
  • Sales funnel stages:
    • Leads (1000) → Prospects (100) → Customers (10).
B2C Prospecting
  • Greater reliance on advertising (e.g., social media, promotions) to build customer interest.
  • Key Components:
    • Cognitive: Raising awareness and understanding.
    • Affective: Creating product preference through emotional engagement.
  • Techniques:
    • Word-of-mouth recommendations and influencer marketing.
    • Merchandising influences sales behavior at the retail level.

Other Tools for B2C Acquisition

  • Customer Referral Schemes (CRS) like “Recommend a Friend” programs.
  • Publicity stunts for broader engagement.

Customer Acquisition Cost

  • Optimal to have low-cost programs yielding highly valued customers.
    • Evaluate:
    1. Number of customers acquired.
    2. Cost per customer acquisition.
    3. Long-term value of acquired customers.
  • Comprehensive understanding of acquisition costs, including marketing, commission, and sales materials.

Making the Right Offers

  • Carefully crafted offers to entice target customers.
    • Insurers may use car insurance as a lead-in for comprehensive service cross-selling.
    • Banks may provide attractive interest rates to gain new customers.

IV. What is D2C?

  • Definition: Direct-to-Consumer (D2C) is a retail model excluding intermediaries, allowing brands direct access to customers.
  • Benefits:
    • Cost-effective pricing
    • Control over customer experience and brand image.
    • Enhanced customer data utilization for better service delivery.
  • Challenges:
    • Fulfillment rivalries against larger competitors.
    • Managing all aspects of marketing and customer relations.

Operational CRM Tools

  • CRM software enhances the acquisition process through:
    1. Lead Management: Oversight from prospect identification to purchase.
    2. Campaign Management: Execution of targeted marketing initiatives.
    3. Event-Based Marketing: Automated responses to customer actions.

VI. Case Studies

  1. Referral Tracking using Google Analytics: Analyzing referral traffic to gauge site performance and derive customer behavior insights.
  2. Bonobos: Utilizing predictive analytics for optimizing customer acquisition strategies, focusing on identifying and catering to high CLV customers, enhancing customer loyalty through personalized engagement and services.

Future Trends in Customer Acquisition

  • Emphasis on content over products, consideration of brand values in the customer experience, and optimizing acquisition through enhanced retention strategies.