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dispatches from the new world of work

2009 Recalibration: Part 3

How does the economic situation help you focus your new customer acquisition efforts?

Creating new customer relationships is one of the most expensive, most ineffective things that businesses do.

Consider how many billions of ads will flash in front of people's eyes today, but go unnoticed. How many millions of direct mail offers will end up in the recycling bin, unopened? How many sales calls won't work, despite hours of preparation, starched shirts, and animated PowerPoint slides?

If there is a part of the business world that most resembles a gas-guzzling hummer, it would be new customer acquisition. There is so much waste in the sales and marketing process that, now, more than ever, we have to be smart and focused about which new customers we pursue, and how we pursue them.

Here's one of the best ways you can improve your return on investment of new customer acquisition investment efforts: Focus on the specific actions you want your prospects to take.

A CEO called me a few months ago and asked me to come in to help him and his team deal with the business challenges the economic situation has created. Finding new customers was a big priority for them, so I asked them to show me what they were doing to make that happen. They showed me ads and advertorials they were placing in trade publications, trade shows they were attending, and a series of postcard mailings to prospective customers. They showed me a Google AdWords campaign, and they told me about the many different methods their various sales people were using to find leads. Then, I asked them to map out their sales process on a white board, showing me all the steps from disinterested lead to committed customer. Within five minutes they told me that they have a 90% close rate if they can get a prospect to visit their facility. I stood up, walked to the white board, and wrote down the list of new customer acquisition efforts that they had described earlier. I then handed the pen to the head of marketing, and asked him to draw a line through all the marketing efforts that were not directly focused on getting prospects into their office. He crossed out marketing plans representing 80% of their proposed spending.

By acknowledging that the true goal of those early lead-generation efforts was to persuade someone to visit the company’s facility, we were able to cut a huge chunk of fat out of the marketing budget. They could either save those dollars or apply them to efforts that focus on this goal. The group even agreed that paying someone's way to their facility was not out of the question—especially now that they'd have the money to do it!

Focusing on specific customer actions not only helps you create a "to-don’t list" of marketing efforts, it helps you focus your message. If the purpose of an ad is just to get someone to call you or come to your website, then you can target the message specifically to that goal. The attention that a prospective customer will allot to you is very limited; by knowing what you want that prospect to do, you can use that ration of attention wisely.

[This is Part 3 of a 6-part series. To read the other entries in the series, you can use these links: Part 1 and Part 2. Or, read more by Cool Friend Steve Yastrow at his website: yastrow.com.]

Steve Yastrow posted this on 03/11/09.

Comments

Steve: are you advocating no more corporate-image advertising, and no more sponsorship of sporting events? But the CEO relishes those 30 seconds on TV at the end of the golf tournament ...

Posted by Mike L. at March 11, 2009 6:57 PM

"90% close rate if they can get a prospect to visit their facility" - make it like Disney World so prospects are craving that facility.

Meanwhile the tax & spend president is taking free enterprise to a de-evolution architectural level that will place even more sales & careers off shore - how to mitigate that Steve - the USA could be designed into a Ritz-Carlton but is becoming Motel Six.

Did I mention "presidential" gaffes of not having a state dinner for the esteemed Gordon Brown, the nefarious Charles Freeman withdrawl & claiming the USA invented automobiles - D'oh!

AUTOMOBILE FIRSTS (USA Library of Congress)

Robert Anderson 1832-1839 ELECTRIC / Electric carriage. Scotland

Karl Friedrich Benz (1844-1929) 1885/86 GASOLINE / First true automobile. Gasoline automobile powered by an internal combustion engine: three wheeled, Four cycle, engine and chassis form a single unit. Germany Patent DRP No. 37435

Love & peace to our UK & German friends for laughing at such mistake prone "leadership".

Posted by C Love at March 11, 2009 7:53 PM

I bet you get invited to all the best Madison Avenue parties.

This is really a great series of articles. So often marketing budgets bloat from a checkbox mentality -- never cut a tool that once worked and always add the next big thing. Efforts end up spread thin, specially in times of budget stress.

Posted by Fred H Schlegel at March 11, 2009 9:03 PM

Steve

It's great to see an example where the theory is played out into an actual result (well a plan anyway - I hope it was successful)

I think this brings it to life that people can do things despite the financial woes.

Posted by PaulH at March 12, 2009 5:09 AM

Steve,

I applaud eliminating programs that do not produce. However, when marketing a product like financial services in a tightly defined geographic area, does not image advertising play an important role as well? People want to see the company they are handing off their money to and feel confident about them. If every marketing program is geared toward producing leads, then you become just a pure selling machine. What is the ideal ratio then for image vs quality lead generation when reputation in community is definitely a plus for your salespeople?

Posted by Larr S at March 12, 2009 8:52 AM

Fred - yes, I am to Madison Avenue what David Frum is to Rush Limbaugh. (See current Newsweek cover story!)

Larr ... here's what I suggest: don't think of image advertising as brand building and everything else as lead generation. The real issue is this: What is the goal/role of every customer interaction, and is that goal/role what you need. The concept of Brand Harmony says that brand impressions are the sum of all interactions with a company, not just those that the company calls "brand building." In fact, my experience is that the confidence people feel in financial services companies comes much less from what they advertise than from what they do.

Posted by Steve Yastrow at March 12, 2009 3:43 PM

How did you then get prospects to visit your clients factory?

Posted by Billy Gee at March 12, 2009 5:10 PM

"The concept of Brand Harmony says that brand impressions are the sum of all interactions with a company, not just those that the company calls "brand building."

This is so true. It reminds of work I did with a resort hotel and a grocery store chain abroad. My focus was everything with regards to the brand down to the contact with the delivery persons. My idea was that every interaction carries a positive or negative impression. Delivery persons too would spread their impressions via word of mouth. It was this kind of buzz that I mostly concentrated on. What are the employees and delivery persons saying?

I have read Brand Harmony and I think it's a great book. Thanks, Steve.

Gotta read that Newsweek article!

Posted by Judith Ellis at March 12, 2009 8:49 PM

Steve,

Did I read that first sentence right? I have many clients that don't advertise one bit. Most of their new clients are driven to them by existing clients. In effect, they are spending absolutely nothing on the word of mouth advertising available through their existing client base. There are many examples of this on a more "micro" level analysis of marketplaces.

If they spend money on any advertising for new clients, typically they'll utilize trade shows and other high impact, target audience opportunities that will bring them potential business or more WOM. I found my CPA through another professional, not a phone book or the internet. In my opinion, word of mouth is still the strongest, least expensive means to a way...

Posted by Scott Peters at March 12, 2009 9:48 PM

Billy Gee - They've been focusing on relationship-building encounters that lead to a "relationship threshhold" where the client is willing to come. http://yastrow.com/nlarchive/2009/relationship-threshold_01-27-09.html

Judith - thanks as usual!

Scott - wouldn't the ultimate marketing program be one where you don't need to do any advertising, because "what you do," as opposed to "what you buy" drives you enough business?

Posted by Steve Yastrow at March 12, 2009 11:40 PM

I understand and agree with Steve in the brand impression is the sum of all interactions etc. This is useful call to arms for a company but I think Scott is closer to the mark. It's the interactions that people don't have with your comapny that are more powerful. Typically these are out of your control apart from sheer reputation for excellence.

Posted by PaulH at March 13, 2009 2:39 AM

PaulH - are other people's comments and raves about you really out of your control? Can't you do things other than have your "sheer reputation for excellence?" I suggest Seth Godin's Unleashing the Ideavirus.

Posted by Steve Yastrow at March 13, 2009 8:40 AM

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"It's the interactions that people don't have with your comapny that are more powerful."

What does this mean?

Posted by Judith Ellis at March 13, 2009 9:12 AM

Steve,

I live that Marketing program every day, I'm sure you do too.

Also---this is getting a little yen and yangish, but the beauty of people's comments and raves about you or your company is that they are completely out of your control and they cost nothing, altough they may cost you your business everything down the road. Obviously, by this blog, we can't control what others are going to say...take C Love for instance. The beauty is that he's going to say what he perceives and believes based on others commentary. The reality, to me, is this. Some of the people that I refer don't force me to say anything. I say something because I've seen their work, witnessed their commitment, and experienced their success. To think we have control is a little bit fallible, just like I can't control the overwhelming amount of bullshit in the market and how consumers base their decisions on that. If one does the work, and does what's described above, people will come and they will bring others.

Good points Steve and I follow your gist...

Posted by Scott Peters at March 13, 2009 9:53 AM

How are you focusing your new customer acquisition efforts in these crazy times?

Posted by Steve Yastrow at March 13, 2009 7:08 PM