Why Companies Should Acquire the Right Customers, Not More
When it comes to business, here are two (oversimplified) options when it comes to customer acquisition that I’m noticing:
Attract the masses with a product that promises everything. Compete on price and give massive discounts in order to convert more customers. Overbook and under-deliver and completely alienate a section of your customers. The customers who should have never been your customers have a horrible experience with you. They cause social and financial damage to your company.
Take the time to identify the right customers. Create marketing that targets and attracts these specific ideal customers. Deliver on exactly the service that they expect from you. Focus on quality product above artificial growth.
With option 1, it’s simple to point to a chart and say “Look how many customers we’re getting! We’re selling so much product!”. But when you go a level deeper than that, you start to see the truth.
You may have sold more product, but how many of those customers returned your product and requested a refund?
How many customers were sold a different product and left a bad review because they imagined they were receiving one thing but got something completely different?
How much potential business are you losing from these bad reviews?
The Hidden Costs of Attracting the Wrong Customer
The ROI of effective marketing makes everything else easier. You are clear on what you offer, you let customers qualify themselves, and you give value to the customer before you sell them.
But of course no marketing is perfect; you’re going to acquire some bad apples. They are deceptive to the executive branch, because sure, they may look like a net benefit from the sales point of view, but they will only cause headaches for your company. They will absorb time, money, and reputation from your company.
These things are a lot harder to gain back than they are to lose.
How to Attract Your Ideal Customer
Initially, it’s hard to find the right customer.
But once you’re in the industry for a few years, you should have a good idea of which customers provide you the most lifetime value (LTV).
The ones with the highest LTV whether that is through profit or through referrals will be the customer base you want to tap into. This is a simplified profile of who you want, but generally you want people who will contribute the most to your business profit-wise. If they’re not bringing in more profit, they’re making you lose it.
You have to coordinate your different departments to acquire and maintain these ideal customers:
Marketing must create content, ads, and conversations that are written in the language that speaks out most to your ideal customer.
Sales must learn how to qualify the right people and understand how to disqualify the problem customers.
Product, engineering, and operations must deliver on the product that marketing and sales claim to provide.
Customer support must be the voice of the customer and provide growth suggestions for other teams to improve the product.
Once you have all of these teams working in cohesion, you will be serving the right customer and serving them well.
Choose to serve the masses and you end up serving half of them well and making their lives truly better, while the other half of them experience a money-entangled pool of failed expectations.