MANAGING THE CUSTOMER
LIFECYCLE: CUSTOMER
ACQUISITION
Chapter 8
Chapter 8 Outline
Introduction
What is a New Customer?
Prospecting
Business-to-Business (B2B) Prospecting
Business-to-Consumer (B2C) Prospecting
Operational CRM Tools that Help Customer
Acquisition
Introduction
The main customer lifecycle management
processes are the:
1) Customer acquisition process
2) Customer development process
3) Customer retention process
In this chapter we will learn about the important
issue of customer acquisition which is the first
stage of the customer lifecycle.
Customer Lifecycle Management Process
Introduction
Several critical questions must be answered when
a company puts together a customer acquisition
plan.
These questions are:
1. Which prospects (potential new customers) will
be targeted?
2. How will these prospects be approached?
3. What offer will be made?
What is a New Customer?
A customer can be new in two
ways:
1) New to the product category
2) New to the company
What is a New Customer?
1) New to the product category: are
customers who have either identified a new need or have
found a new category of solution for an existing need.
Example ( new needs): When a couple has their first
child they have a completely new set of needs related to
the growth and nurturing of their child.
This includes baby clothes, food and toys.
As the child grows, the parents are faced with more new-
to- category decisions, such as preschool and elementary
education.
What is a New Customer?
Example (new category of solution for an existing need):
Mobile phones have replaced card or cash-operated pay-phones
in many countries.
Environmentally friendlier detergents and diapers are growing
their share of market because customers are switching from the
existing product offerings.
In B2B marketplace, customer can be new-to-category when
they begin an activity that needs resources that are new to the
business.
For example: when McDonald’s entered the coffee shop market,
they needed to develop new relationships with new suppliers.
What is a New Customer?
2) New to the company: are won from
competitors.
These customers might switch to a new company
because they feel the new company offers a better
solution or because they value variety.
New-to-company customers are usually the only
option for growing customer numbers in mature
markets where it is very difficult to find new-to-
category customers.
What is a New Customer?
In developed economies, companies in the grocery
retail can only succeed by winning customers from
established retailers.
New-to-company customers can be very expensive
to acquire especially if they are very committed to
their current supplier.
Commitment is reflected in a positive attitude to,
or high levels of investment in, the current supplier.
Both of these reasons represent high switching.
Prospecting
In CRM, prospecting means searching for
opportunities that might generate more value for
the company.
We will look at prospecting from two
perspectives: They are:
1) Business-to-business prospecting
2) Business-to-consumer prospecting
Business-to-Business (B2B) Prospecting
1) Business-to-business prospecting: In
the B2B environment it is usually the job of
marketers to generate leads for the salesperson to
follow up on.
Leads are individuals or companies that might be
worth approaching.
The salespeople need to qualify leads.
Business-to-Business (B2B) Prospecting
A number of questions are asked to qualify leads
such as:
● Does the lead have a need for a company’s
products?
● Does the lead have the ability to pay?
● Is the lead authorized to buy?
If the answers are yes, yes and yes, the lead
becomes a real prospect.
Business-to-Business (B2B) Prospecting
B2B Leads come from a variety of sources such as:
1) Satisfied customers: Customer-related data allows
many companies to identify which customers are very
satisfied.
These very satisfied customers can then be approached
for a referral.
Very satisfied existing customers are usually prepared
to write a letter or an e-mail introduction, give a
testimonial or receive a call to verify the credentials of a
salesperson.
Business-to-Business (B2B) Prospecting
2) Networking: involves establishing and maintaining
business-related personal relationships.
A network could include members of a business association,
friends from university or colleagues in other companies.
Referral networks are very common in professional
services.
Example: Accountants, banks, lawyers, auditors, tax
consultants, estate agents will often join together into a
referral network where they refer their clients to other
members of the network.
Business-to-Business (B2B) Prospecting
3) Promotional activities such exhibitions,
seminars, trade shows and conferences can be
productive sources for B2B leads.
Companies that pay to participate in these
events can either:
• Obtain privileged access to delegate and attendee
lists who could be leads.
• Generate their own lead list which could include a
list of visitors to their own stand at a trade show.
Business-to-Business (B2B) Prospecting
Promotional activities could also includes B2B
advertising.
B2B businesses usually advertise in highly-targeted
specialist media such as trade magazines.
Another important promotional activity for B2B
companies is publicity.
Publicity is defined as the generation of free editorial
content relevant to a company’s interests.
Good PR can generate publicity for a product or
company in the right media.
Example of a Trade Magazine
Business-to-Business (B2B) Prospecting
4) Company websites: The Internet allows potential
customers to search globally for products and suppliers.
5) Canvassing: Involves making unsolicited calls and it
is sometime referred to as cold calls.
Canvassing can be a inefficient use of an expensive
asset: the salesperson.
Some companies do not allow their salespeople to
engage in canvassing.
Other companies outsource this type of prospecting to
third parties.
Business-to-Business (B2B)
Prospecting
6) Telemarketing is a more cost-effective way of
prospecting than using a salesperson.
Telemarketing, which is also called telesales, is a
prospecting method in which telephone, and,
sometimes, other electronic media such as fax and
e-mail are used.
Telemarketing is typically performed by staff of
customer contact centers.
Business-to-Business (B2B)
Prospecting
Outbound telemarketers make outgoing calls to find
and qualify leads.
Inbound telemarketers receive calls from potential
customers.
Besides prospecting, telemarketing can also be used
to manage other parts of the customer lifecycle such:
Cross-selling
Handling complaints
Winning back at-risk or lost customers
Business-to-Business (B2B)
Prospecting
7) E-mails: Using emails for B2B prospecting has several
advantages. They are:
1) A very large number of business decision makers have e-mail
account.
2) It is very cheap. It costs about the same to send one thousand
e-mails as it does to send a single e-mail.
3) It is quick and easy for recipients to respond.
4) Content can be personalized.
5) E-mails are not tied to a specific timeframe like a sales call.
6) Production values can be customized to audience preferences:
A company can use rich graphical or simple textual content.
Business-to-Consumer (B2C) Prospecting
1) Business-to-consumer prospecting: In
B2C environment, the distribution of customer
acquisition effort is different.
Customer acquisition in the B2C environment is
usually done through the following methods:
1) Advertising
2) Sales Promotion
3) Buzz or Word-of-Mouth
4) Merchandising
Business-to-Consumer (B2C) Prospecting
1) Advertising: is one of the main methods used
for generating new customers in B2C
environments.
Advertising can be used to achieve two different
classes of communication objective: cognitive and
affective.
Cognitive advertising objectives include:
increasing awareness, developing understanding,
and generating knowledge.
Business-to-Consumer (B2C) Prospecting
New customers usually need to be made aware of the
product and to understand what benefits the product
will deliver.
Affective advertising objectives include developing a
liking for the product and generating preference.
In high involvement purchasing contexts, where
products or their usage context are personally important
and relevant, prospects will usually go through a learn–
feel–do process when making their first purchase.
What does this mean?
Business-to-Consumer (B2C) Prospecting
Before buying, prospects acquire information that
helps them learn about and compare alternatives
which will reduce perceived risk. (learn)
Prospects then then develop a preference for, and
intention to buy, a specific offer. (feel)
Customers are basically conducting a complex
problem-solving process.
Advertising is one of the sources that prospects
use in the learn–feel part of that process.
Business-to-Consumer (B2C) Prospecting
Advertisers are interested about two main issues as
they try to acquire new customers: message and
media issues.
1) Message: In an highly communicated world, it
is essential for an advertisement to stand out from
the background clutter and capture the audience’s
attention.
Advertisers call this ‘ cut-through ’.
Business-to-Consumer (B2C) Prospecting
If the advertisement doe not ‘cut through’, no cognitive,
affective or behavioral outcomes can be achieved.
What makes an advertisement stand out? The following are
some examples:
black and white advertisements in color magazines
image-based advertisements in text-dominated media
loud advertisements in quiet media
advertisements that leave you wondering ‘ what was that all
about? ’
advertisements that challenge your comprehension and
emotions.
Business-to-Consumer (B2C) Prospecting
2) Media: Media selection for new customer
acquisition is sometimes very simple.
For example: there are print publications such as
What Digital Camera? and Which Mortgage? that
are targeted at new-to- category prospects and are
suitable for high-involvement products.
For low involvement prospects, frequency is a more
important media than reach.
What is the difference between reach and frequency?
Example of Print Publication that is that is Targeted Specifically
at New-To-Category Prospects and are Suitable for High-
Involvement Products
Business-to-Consumer (B2C) Prospecting
Reach is the total number of a targeted audience
that is exposed at least once to a specific
advertisement or campaign
Frequency is the average number of times that a
targeted audience member is exposed to an
advertisement or campaign.
Business-to-Consumer (B2C) Prospecting
2) Sales Promotion: is defined as any behavior-
triggering temporary incentive targeted at
prospects, customers, channel partners or
salespeople.
The are many types of consumer sales promotion
such as sampling, free trials, discounts, coupons,
competitions, and rebates or cash back.
Business-to-Consumer (B2C) Prospecting
3) Buzz or Word-of-Mouth: is an interpersonal
communication about a product or organization where
the receiver assumes that the communicator is
independent of any commercial influence.
Word-of-mouth has been shown to impact receivers’
knowledge, emotions, intentions and behaviors, and is
considered as independent and trustworthy.
Marketers can promote word-of-mouth by identifying
and sponsoring opinion formers, such as radio show
hosts and others.
Business-to-Consumer (B2C) Prospecting
4) Merchandising: is any type behavior-triggering
stimulus or pattern of stimuli other than personal
selling that takes place at retail or other points-of-
sale.
Merchandising is meant to impact consumer
behavior in-store or at other points of sale such as
restaurants, banks or gas stations.
Operational CRM Tools that
Help Customer Acquisition
CRM software includes a number of
operational tools that help companies in the
customer acquisition process such as:
1) Lead management
2) Campaign management
3) Event-based marketing
Operational CRM Tools that
Help Customer Acquisition
1) Lead management: Sales-force automation (SFA)
software helps B2B companies to handle the selling
process.
A vital part of that process is lead management.
The lead management process includes a number of
subprocesses such as
lead generation
lead qualification
lead allocation
lead tracking.
Operational CRM Tools that
Help Customer Acquisition
Lead allocation processes ensures that leads are
routed to the right salesperson.
Lead tracking processes trace the conversion of
prospects into customers.
Operational CRM Tools that
Help Customer Acquisition
2) Campaign management: managers design, execute
and evaluate marketing campaigns with the support of
CRM technologies.
Campaign management software allows companies
to:
Manage and implement automated and personalized
campaigns
Generate leads for sales follow-up
Generate and manage contact lists
Comply with anti-spam legislation
Operational CRM Tools that
Help Customer Acquisition
3) Event-based marketing (EBM): gives companies
opportunities to approach prospects at times which
have a higher chance of leading to a sale.
For example: In retail banking, an event such as a
large deposit into a savings account may trigger an
approach from the bank’s investment division.
A call from a customer asking about rates of interest
on a credit card may trigger a call from a customer
retention specialist.
Operational CRM Tools that
Help Customer Acquisition
Many B2C companies can connect purchasing to
life stage events.
For example: Finance companies target
mortgages at newlyweds and empty nesters whose
children have left home.
Clothing retailers target different offerings at
customers as they age: branded fashion clothing at
single employed females; baby clothes for new
mothers.
Operational CRM Tools that
Help Customer Acquisition
Public events, such as interest rate falls or hikes,
tax law changes and weather events or competitive
events, such as new product launches, might trigger
an EBM opportunity.
Reference
Buttle, F., & Maklan S. (2019). Customer
Relationship Management: Concepts &
Technologies, 4th edition, Routledge.
