New Customer Acquisition for Consumer Services

Successful New Customer Acquisition: A Perspective  

Service Companies—whether Personal, Home, Auto or Entertainment—have only two fundamental sources of future revenue: purchases by the company's existing customers and purchases by those who have not previously transacted. Repeat buyers drive current profitability. New buyers drive growth and future profitability. Both aspects of this success equation are critical.  

Reaching the right audience with a strong offer is the foundation of success.

This article examines the methods of acquiring new customers. Years ago, marketing pioneer Ed Mayer first articulated the now well-known axiom that "Success in direct mail is 40 percent lists, 40 percent offer and 20 percent everything else." Whether or not one agrees with Ed's specific percentages, no reasonable marketer disputes the fact that reaching the right audience with a strong offer is the foundation of success. It remains true today that selecting the right targets to make up a prospecting audience is absolutely essential. This principle applies equally to the digital channels of today as it does for the ongoing use of direct mail marketing. To be successful, digital display, video, mobile, social media advertising and direct mail must reach a productive audience.  

Methods for developing audiences have changed markedly over the years. Some of the earliest uses of computers were to segment and categorize. The scale and scope of computer use in audience development has grown rapidly over the past 20 years. The launch of our digital world in the 1990s seems like a very long time ago.  

Our view of successful prospecting is that lost customers must be replaced with a larger number of new customers that, on average, are superior to those lost to attrition.

More change is coming. Technology will continue to change, and ROI will become more difficult to secure and predict. For example, costs will rise in the direct mail channel due to continually escalating postage costs. Higher media costs will be found in many digital channels as more and more marketers bid for the same consumer view at the same time. The pace of change in technology will continue, and likely accelerate. At Wiland we want to help our clients be successful despite higher costs and rapid change. That's what we are all about: Delivering the Future. As it relates to new customer acquisition this means we strive to help our clients eliminate waste in their marketing budget (offsetting rising costs) to maximize marketing dollars driving growth and profitability. We use our unparalleled data and technology resources to affordably identify better, more-productive audiences which produce superior long-term ROI for our clients.  

Every Service Company can benefit from Wiland's technology, as well as the consumer intelligence we provide, to help them compete more effectively and be more successful despite rising costs and massive change. One way we do this is by helping our clients focus on acquiring the right new customers—customers that are likely to produce good Long-Term Value (LTV). Data and technology dictate that now is the time for Service Companies to shift their focus toward strategic new customer acquisition. Focus not only on an acceptable cost of initial customer acquisition but also on the contribution new customers make to overhead and profit over the long run. Successful customer acquisition is critical to marketing success and long-term organizational viability. It is the lifeblood of most Service Companies. Each business should set aside time to think strategically about how it acquires new customers, whether some new customers are undesirable, and how to improve the overall contribution provided by the new customers the business obtains. This is what Wiland does. We help our clients to invest appropriately when acquiring new customers: greater Long-Term Value warranting greater investment. We help our clients define and find desirable new customers that drive business success.  

Successful New Customer Acquisition: Replacing Lost Customers with Better Customers—and More of Them

Every company experiences some degree of customer attrition each year. In all cases, these lost sales must be replaced with new or "reactivated" customers in order to preserve or grow revenue and maintain a healthy, vibrant business. For Service Companies seeking significant growth, the importance of successful prospecting is even greater.  

But what exactly is "successful prospecting?" One perspective of customer acquisition is to do the least amount of work, and spend the least amount of money, to get as many customers as possible into the fold. Following this logic, a marketer would be expected to promote all prospect audiences for which estimated cost per customer acquired falls below the acceptable threshold. On the surface, this seems like sound marketing strategy, as it aims to maximize the number of new customers acquired while limiting investment to an acceptable level. Indeed, many Service Companies have historically followed this methodology, marketing to all prospect lists and other non-customer audiences whose performance meets or exceeds a stated short-term cost objective. This method can produce good results, but sometimes it can produce bad results. Even if the result of using this "tried and true" approach is good, that does not necessarily mean it is the best approach. Something else could be better—maybe a lot better.  

At Wiland, we believe in a better approach, one that produces superior long-term success. We have proven it repeatedly in our years of experience with clients. While we acknowledge the importance of achieving quantity objectives in customer acquisition, we strongly believe that the quality of customers matters just as much—maybe even more. In order to achieve sustained success and grow profits, Service Companies must focus on adding customers who produce strong Long-Term Value (LTV). It is well understood that repeat and regular customers are more valuable than one-time or infrequent customers. It is of course understood that customers who spend more are more valuable than those who spend less. Repeat, higher-spend customers are superior to infrequent, lower-spend customers. Committing marketing budget to all of these groups indiscriminately can be detrimental to your business. Thus, our view of successful prospecting is that lost customers must be replaced with a larger number of new customers that, on average, are superior to those lost to attrition—and superior means that they produce higher LTV, leading to revenue growth and a better bottom line.  

Delivering Value: High-LTV Prospects

Company founder Phil Wiland and his team have been helping businesses acquire new customers since the 1970s. No other company can match the depth and breadth of Wiland's capabilities and experience with new customer acquisition. Leveraging our massive data resources, advanced technology, proprietary analytical platform, and talented, seasoned staff, Wiland creates and delivers offline and online prospect audiences that not only perform well initially but also generate new customers who repeat purchases at a high rate, delivering strong LTV.  

Wiland creates and delivers offline and online prospect audiences that not only perform well initially but also generate new customers who repeat their visits at a high rate, delivering strong LTV.

We help Service Companies improve their acquisition marketing across all promotional channels. We enable clients to optimize and bolster financial performance by substantially reducing marketing budget waste and spending the saved budget more wisely, driving both bottom- and top-line growth. Many of our clients have discovered that using Wiland prospect audiences produces new customers who maintain a relationship with them for a longer time than compared to other prospect sources. These customers spend more money in total, adding recurring profit to the bottom line. Some clients don't track LTV by new customer source, so they remain unaware of the benefit they are receiving. Other clients work with agencies who insist we focus on initial response rate without regard for long term profit. These clients also deprive themselves the long term advantage of targeting—and measuring—strong LTV. A key part of our strategy is to encourage our clients to focus not just on acquiring new customers but also on whether the new customers they are acquiring are worth the investment.  

Wiland's expertise in delivering these desirable new customers is proven by our sustained growth—in the middle of the economic downturn. For the past ten years, Wiland has grown 15% to 50% every year, without exception, through the recession and continuing to today. We are not capturing market share because we sell more aggressively. Quite the opposite: We are growing rapidly because we focus on doing right by our clients, finding them a large volume of high potential prospects that become high LTV customers, driving client growth and success.  

Key Advantages: Data Depth and Superior Strategy

Wiland offers Service Companies a tremendous advantage: a massive database with diversity and depth of transactional data that surpasses other industry data sources. We track not only what, when, and from whom consumers buy, but also the channel utilized for the purchase. With over 2,500 participating clients, the Wiland database includes transactions from well-known, nation-wide service companies, small independent providers, and everyone in between. Collectively, our client base targets consumers in virtually any category imaginable.  

In addition to service transactions, Wiland has unsurpassed publishing, retail and nonprofit data. Our database includes over 160 million consumer magazine and newsletter subscriptions, donation information from over 70 million individuals and multi-channel retail purchases (catalog, in-store and online) for 110 million households. These consumer transaction behaviors are strong predictors of future spend on services. Our database also includes demographic and psychographic data on virtually every consumer in the United States. The result is a robust, 360-degree view of buyer behavior that enables the creation of new customer acquisition audiences that precisely target the right prospects for a given business. We then help our clients reach those audiences across the full range of channels used in today's multimedia environment.  

Another key advantage is our dedication to good marketing strategy. We don't measure success by how many prospects we provide. We want to provide more prospects, of course, but that isn't how we measure success. We want to provide more prospects that deliver good long-term value for our clients. This difference in strategic approach makes us a superior new customer acquisition partner. Clients that work closely with us to acquire desirable new customers ultimately improve their business as a result. We strategize. We improve. We refine. Ultimately, our clients win the prize: We provide more new customers that actually produce good LTV.  

It is important to point out that our clients don't have to choose between quantity and quality. We want to deliver both. We keep the focus on quality and encourage more testing and refinement. Clients who work with us in an iterative fashion of test and refinement ultimately obtain more new customers than before. These new customers are of better quality, so ultimately the one-time portion of their customer base declines, repeat customers come sooner and are more frequent, and our client grows—both revenue and profit. It isn't easy. You have to stop and think about it. You may need to change the way you view customer acquisition. Isn't that what good business people should do? Question current practices and attempt to beat them. Seek better results tomorrow than you have today.  

We're Ready to Help

Whether a company's current objective is rapid growth, maximizing profit, or a balanced combination of both, Wiland stands ready to help Service Companies realize a better future—a future of superior new customer acquisition campaigns that build customer base, improve profitability and strengthen the brand.

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