It provides growth opportunities regardless of economic conditions — but which prospects should you pursue?
Pursuing new customers in existing markets can be an expensive proposition if not done with proper planning, analysis and execution.
Customer Sweet Spot Analysis
You need to begin by analyzing your current customers. Who are your best customers? What do you know about them? What makes them your best customers? A critical component of that analysis includes an in depth analysis includes customer purchasing behavior over a period of time, assessing purchasing patterns, transaction volume, frequency, products purchased, and others. Furthermore, the analysis considers customer specific attributes to find patterns among like customers. In the end, the determination of your best customers, known as the sweet spot, becomes a critical component of your prospect targeting.
Identifying Top Target Prospects
Now that you have a thorough understanding of your best (Sweet Spot) Customers, you are ready to move on to selecting a set of prospects to pursue. In most cases this means purchasing an external list. However, not all lists are equal and knowing which source provides the most accurate data is critical. Furthermore, targeting only the most obvious prospect candidates may preclude other high potential opportunities. Before finalizing your prospect list, there are other considerations such as understanding the competitive environment. Distribution Strategy Group has extensive experience in both the Analysis and Targeting of the very best prospects for any given distributor.
Developing a Message
Acquiring new customers in existing markets almost always means that you are winning customers away from your competition and this is a challenging goal, especially when customers are satisfied with their current supplier. So you need a break thru message or offer to get these prospects to take a chance with you. The goal is to get the prospect to make a purchase so they can experience the difference in buying from your vs. their current supplier. Valuable insight into developing your message and offer is contained in the research conducted in the first step above–Customer Sweet Spot Analysis.
Converting Prospect to Customer
OK, so you got some prospects to make a purchase but have they committed to switching their ongoing purchases to you. Not by a longshot. There is still a lot of work to be done. How happy are they with your performance? Have you done enough to get them to come back one more time? Did they just take advantage of a promotional offer? You won’t know if you don’t ask, so you it’s back to purchasing analysis. The ultimate goal is to convert a prospect from a one time buyer to a lifetime purchaser. In fact you need a comprehensive life-cycle management program which moves a prospect to a customer, through the growth stage, into ongoing maintenance of their business and lifetime retention. The previous two steps have allowed you to create a prospect list that has the highest potential for success. But with that list in hand, what is the best way to go after these prospects? There is not a one-channel-fits-all answer to that question. Rather it is a process of testing (scientifically) a number of channels and Marketing media to determine which prospects respond best to what. You will need to monitor prospect response and behavior while conducting rigorous analysis to determine what produces the highest return on investment moving forward. Success in your initial prospecting efforts supports funding for ongoing customer acquisition campaigns.
Figure 1 — Channel Usage
Figure 2 — Channel Effectiveness
Jonathan Bein, Ph.D. is Managing Partner at Distribution Strategy Group. He’s
developed customer-facing analytics approaches for customer segmentation,
customer lifecycle management, positioning and messaging, pricing and channel strategy for distributors that want to align their sales and marketing resources with how their customers want to shop and buy. If you’re ready to drive real ROI, reach out to Jonathan today at
jbein@distributionstrategy.com.