You certainly want to draw new people to your brand. Who doesn’t? But are you bringing in people who are new to your space, or just fighting for existing share?
When it comes to acquiring new customers, the best strategy is a balanced approach across the consumer journey. Companies commonly get stuck perfecting the later stages – i.e., in the intent, purchase and loyalty stages – and fail to attract true net-new prospects into the journey in the first place.
The beginning of the journey is usually left to mass brand awareness efforts with poor targeting. This creates a gap in the journey between brand awareness and purchase consideration. This also wastes a lot of effort on generating awareness with never-to-be-customers, while not gaining consideration from high-value prospects.
One of the more acclaimed strategy books of the 2000s was the book Blue Ocean Strategy, by W. Chan Kim and Renée Mauborgne, about how to open up a new market space and create new demand.
The authors compare what they call “red oceans” and “blue oceans.” Red oceans are markets where companies fight with little differentiation for the same customers, and therefore have to compete on price. The blue ocean strategy details how to avoid getting caught in red oceans.
When it comes to customer acquisition strategies widely used today by brands, it strikes me that they’re still defaulting to a red ocean strategy.
Brands tend to focus acquisition efforts where competition is the fiercest, and often fail to do true net-new prospecting. For example, brands fight for:
- Past Customers: Reactivation campaigns to past purchasers are common, in an attempt to re-engage customers and subscribers who’ve made a purchase in the past but have since gone dormant. This is a useful tactic, but won’t power the start of the consumer journey.
- Competitor Customers: Some conquesting efforts are intentional. Some happen by accident due to lack of transparency. For instance, with co-op databases, you may accidentally find yourself conquesting when you thought you were net-new prospecting. When targeting consumers via a data co-op, you provide a list of your current customers and in return you more-or-less get a list of your competitors’ customers.
- Intent-based Prospects: These prospects are people who’ve declared a clear intention to make a near-term purchase, based on their behavior. When people provide contact details on an auto website, or ask for a quote from an insurance broker, they’ve made a clear statement about their being in-market or nearly in-market. Intent data is an important factor in calculating net-new prospects, but it’s one piece of a larger data puzzle. With intent-based prospects, once the prospect has registered her name, it’s sold to 3 to 15 brands who are left to win her over on price.
Not sure where to start with Lead Gen? You're not alone. Online Marketing Institute recommends these classes on Demand Gen. These classes make it easy for anyone in the digital space to understand the fundamentals of demand generation.
So why do brands neglect true prospecting efforts?
One reason is, there’s a lot of short-term reward for focusing on the end of the consumer journey and efficiently acquiring low-hanging fruit. Having a high conversion rate from consideration-to-purchase looks and feels great. The problem is the inherently lower volume in this stage in the journey, and even that volume fizzles over time without a strong early-stage acquisition process.
The other reason is status quo. It was the norm to purchase or rent “dumb” prospect lists for acquisition campaigns meant to drive new consumers to your brand. These lists were easily available, but lacked statistically relevant targeting, and mainly resulted in poor campaign performance. Yet, for a long time there wasn’t a better alternative. Some brands invested in manual data science to attempt to better predict future prospect behavior, but this was a time-consuming and costly process. And results varied.
Today, with automated cloud technology, it’s now possible to identify net-new prospects who are new to your business and who are the most likely to love and buy your products. And it can be done more accurately, in less time and with less cost. This is a game changer for the early phases of the consumer journey. Rather than rely on un-targeted brand efforts to people who will never become customers, brands can now spend brand dollars intelligently to reach large prospect pools, specifically those who have a significant chance of becoming a new customer in your space.
In the end, lower-journey strategies are important, but don’t dedicate all your marketing efforts to the zero-sum game. Real net-new prospecting will move you beyond fighting on price and features. Done right, blue ocean prospecting generates higher margins and is by nature a positive-sum sport.
Want to learn more about any of the topics discussed in this article? Visit the Online Marketing Institute to browse over 400 classes in the digital and social media marketing space. Ready to start learning? Sign up here here.
This article was originally posted on the Reach Analytics Blog.