Creative Customer Acquisition – Forget about Social Media
David Skok of Matrix Partners recently wrote an outstanding post about the importance of metrics in the SaaS world. Two of his biggest points were about customer acquisition costs and churn—and how critical these are to the sustainability of SaaS businesses.
David is right. And beyond SaaS, all corporations – from Starbucks to Walmart – relentlessly track what is known as customer lifetime value or CLV. Simplistically—the entire lifetime value of the customer to your business depends on just two things a) the costs to ‘acquire’ her and 2) how long she stays around (retention / churn).
Naturally, all this discussion of metrics leads us to focus on the ‘cost’ of customer acquisition. Our minds race to who we must pay to bring in customers (marketing, advertising, sales costs etc). But this mindset often leads people to forget there are other creative ways to attract customers – often times without ‘cost’! Here are a few interesting stories…
1. Segment, reach out, and provide value to your customer base: A few months ago my business partner called me during the day and said “tune your radio to little saigon 106.3 FM – I’m going on the air”. I’m thinking “huh? WTF is he talking about?” Pretty soon I was tuned in to him promoting our business live on the air. The radio station was translating his English words to Vietnamese. Now he’s a pretty creative guy but this blew me away – he had approached this local radio station, sold them on the value of our business to the local community, and got on the air – all in a matter of hours.
I’m not suggesting that radio advertising is a new way to reach people, but that’s the point. Radio is a time-tested way to reach a segmented audience. In our case, it wasn’t even about placing ‘ads’ either––we got on the air for free! It was about providing value to the radio station’s captive community. They loved the message, we were invited back again and again, and the phones literally blew up following the radio shows. It’s doubtful we could have effectively tapped the local market to this extent, even with costly acquisition methods.
2. Your customer is not always initially your customer: In college I used to consult for small businesses, writing software to automate their operations. At one point I was consulting to the CEO of a window installation contractor – I’d done a month of work, and had a minimum demo version that could eventually be used by salespeople to conduct field estimates with laptops.
Comp was discussed and agreed upon (they had signed a LOI and I “billed” them along the way). Things fell apart for one reason or another as the project’s scope grew in complexity. I wasn’t paid. At that point I knew that litigation was probably useless since a legitimate contract was never really agreed upon. I learned a lot and was okay with moving on. But I reached out to an attorney anyway. We met for an hour and he asked me loads of questions about the software. He ultimately agreed that I didn’t really have a case.
Then it hit me. I realized I had a captive audience, and I could turn this into a sales meeting. After discussing my ‘case’ and turning the attorney into a believer of what my software could do, I switched gears to tell him what I could do for his firm. He hired me shortly thereafter to automate a bunch of internal processes throughout the entire law firm. And yes, he paid me.
Point of these brief stories is that a lot of customer acquisition is creative and situational. Sometimes we rely too heavily on what’s accepted and “hot” (social media etc) to attract customers. Established channels and creativity are forgotten. (and no, I am not beating up on social media, and it’s free too—just using it to symbolize how we tend to fixate on what’s ‘hot’).
Charlie O’Donnell related to this phenomenon in his recent post about the NY Tech scene:
“Most new entrepreneurs don’t even know where to look for talent or how to attract it. They show up at the NY Tech Meetup or post a job on the nextNY board and expect the developers to just come rolling through—when most of those groups are actually filled with other entrepreneurs looking for the same thing . You need to broaden your horizons, and again, turn over way more rocks to find good developers. There are user groups, gaming meetups, meetups in security or agile development—lots of places entrepreneurs rarely tread”
I couldn’t agree more with Charlie: creative “customer” acquisition applies to more than just attaining customers / clients…. it also goes for attracting partners, employees, and in the case of those looking for work, employers!
Be creative, go where others aren’t looking, and don’t forget that a whole face-to-face world exists beyond the web…