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.