Customer Acquisition

Front 1

what's customer acquistion?

Back 1

activities that end with a cust's first purchase

process that encompasses the first purchase as well as other non-purchase encounters that precede the first purchase

Front 2

what is acquiring customers important?

Back 2

custs are assets: must acquire them before manage them

- all firms lose customers, must keep acquiring new

- cust-firm relationship develops during the acquisition stage, affecting perf. of later stages and retention / add-on selling values by who firm acquires

- choice of custs affect their skills sets and images over time

Front 3

who are the firms that should emphasize acquistions?

Back 3

- whose prodcuts have HIGH switching costs
- firms in NEW markets
- firms whose product's quality is IMPERFECT

Front 4

what are the rules of customer acquisition?

Back 4

- acquire any customer as long as the discounted future value of the customer exceeds the acquisition costs for that customer

- when you broaden the acquisition effort, be prepared for lower response rates

- the greater its profts from retention, the greater the firm's cust acquisiton investment should be

- higher the percentage of the initial aqcquistion investment that a firm recovers in the first period, the great the acquisition investment

Front 5

what's targeting?

Back 5

choosing the relevant segments whose customers the firm will invest its marketing resources to acquire

Front 6

what to assume when targeting?

Back 6

should target custs who recognize that they have a need or desire for the firm's offering
(as well as those who have not yet identified their needs or desires but who could benefit from the firm's offerings)

Front 7

what are the types of targeting?

Back 7

first-degree, individual
(custs/prospects indentified as most profitable are targeted and solicited - scoring models)

second-degree, segmented
(custs are classified into segments for which data already exist - zip code)

third-degree, self-selection
(designed marketing programs and customers respond - coupons, channel models)

Front 8

what are strategies for acquisition?

Back 8

low intro prices / penetration pricing

awareness generation

trial

Front 9

what's intro pricing?

Back 9

pricing low to acquire customers and to raise prices later

Front 10

what are the basics of intro pricing?

Back 10

- should decline as segment's max retential potential goes up
- should be higher for grps that become more price sensitive over time
- higher intro prices make sense to evolving markets (prods become obsolete fast or more alternative will become available)

Front 11

why be prudent with into pricing?

Back 11

can greatly influence expectations about retention pricing:
- be clear about it being a special, one-time only promo
- list regular prices and the level of discounts in the communication

Front 12

what's the key to acquisition?

Back 12

start with the right customers and design the right marketing / acquisition programs

Front 13

how to use data analysis for acquisition?

Back 13

tools:
- customer profile database
(sales potential, customer characs)

- data analysis tool
(profiling, regression scoring)

Front 14

what's customer profiling?

Back 14

analyze existing cust base and then target custs based on the characs of current ones

Front 15

what's the process for profiling?

Back 15

1. take a sample of current customers
2. obtain and append to the cust record relevant demographic and cust characs info about their custs
3. cross-tab or use clustering of demos to describe or "profile" current custs in terms of these characs
4. target custs with identical or similar profiles as the current custs

Front 16

what's the regression scoring?

Back 16

analyzing which variables predict an outcome
(income level, gender, # family mbrs)

Front 17

what's the regression scoring process?

Back 17

1. draw random sample from overall population of prospective customers

2. obtain data as to indiv. cust characs from this sample

3. initiate a mktng campaign directed at the random sample and record which custs become custs

4. with that, develop a regression scoring model
(series of weighted variables that predict which prospects are more likely to become custs based on their characs)

Front 18

what's done after weighting the regression scoring?

Back 18

1. calculate scores for prospects who were not in the random sample by plugging their indiv characs into the regression equation

2. rank-order prospects from the highest to lowest, according to their scores

3. target the firms' marketing campaign at those prospects with scores above a designated cutoff scores, which is based on a combo of financial and marketing factors

Front 19

what are the 2 types of demands when acquiring competitors' customers?

Back 19

primary demand
(for general product class or entire industry)

selective demand
(for a specific company's brand)
(implicitly stealing customers from other competitors)

Front 20

what are the risks in acquiring competitors' customers?

Back 20

-questioned loyalty
(possibility future mobility / switching)

- price war
(a new offer (from my firm) should be more attractive than the previous (from another))