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Brief Explanation Introduction

How can you acquire those previously identified customers?

Once you’ve worked out which customers to target, social investors will wish to know how you will bring in new customers. This is your ‘customer acquisition strategy’.  

A key distinction is whether your model is ‘B2B’ or ‘B2C’. In other words, are your customers other businesses (‘B2B’) or are you selling directly to consumers (‘B2C’?). If you are selling to other businesses, your sales team needs to be focused on making connections with the procurement team in those target businesses, and developing a persuasive corporate offer.  

This might involve for example drawing up a shortlist of the top ten ideal corporate customers for your business. Then working out who you know who could approach them (perhaps a board member, or someone on your team with relevant contacts). Is there a conference they attend where you can make a connection? How would you make a sale to these top ten customers? Who do you know or could reach out to make the relevant introduction? Can you offer some kind of ‘try-before-you-buy’ type offer? 

If your model is B2C, then you need to work out how you’re going to reach individual consumers. This might involve some kind of marketing campaign to foster general awareness, accompanied by a promotion strategy with retailers or distributors to boost customer sales. For example, if you run a website, what kind of strategy will drive traffic to your site? You may also wish to consider promotion strategies with your customers to incentivise them to introduce you to their friends. 

Exercise 1: B2C or B2B

Consider whether your business model is a B2B strategy, or whether it is a B2C. Do you sell directly to end users (i.e. individuals and households) or do you sell to other businesses?  

As a brainstorming exercise, consider what your business model were to look like if you were to switch it from B2B to B2C, or vice versa? 

For example, an education venture which sells an educational game directly to parents (a B2C strategy) might wish to think about selling through schools. Would this be a faster way to make sales? Or if already selling to schools, could there be a sales option through selling directly to the public? 

Exercise 2: What is Your Customer Acquisition Strategy?

Now that you’re clear about whether yours is a B2B or B2C business model, how will you acquire new customers? For B2B models, this will be about finding ways to achieve sales with your business customers. This means having a sales team targeted on meeting and persuading business customers to stock your product or buy your service. Your team will need to know which customers to approach, and have a way of doing so. Can they get introductions through key contacts of yours? Are there regular events where sales pitches can be made? 

For B2C businesses, you need to both create customer awareness of your product / service (through marketing and advertising), and find a way to bring customers to you (‘sales’). For your particular social business, we suggest brainstorming different ways that you might be able to achieve this. 

Exercise 3: What is Your Cost of Customer Acquisition?

Investors will wish to know your estimated ‘cost of customer acquisition’. This is an estimate of how much on average it costs you to bring in one new customer, relative to how much income that customer will provide you over time. The following site has an easy to digest piece on how to calculate the two aspects: http://www.forentrepreneurs.com/startup-killer/  

For a B2B strategy, this might involve looking at how much each person on your sales team costs, and then working out how many customers on average are brought in by each salesperson.  

For a B2C strategy, the calculation might be the number of customers brought in by a sales campaign x average revenue per customer per year x average number of years customer stays, divided by the cost of running the campaign.  

Can you make a similar calculation for your own business? Or for different customer acquisition strategies that you might adopt? Which one looks the most cost-effective? 

 

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