The efficiency of the customer acquisition process is a critical success factor for all businesses. After all, it is reasonable to assume that any business operating a hopelessly inefficient method of winning customers isn’t going to be around for too long!
So, this is something we need to track which means that we have to measure it, something that, in my experience, the SME sector tends not to do too often. Part of the problem may be down to the perceived complexity of ‘marketing analytics,’ and a lack of time and resources may have something to do with it. But, whatever the reason, this is something we need to get our heads around.
Here is a simple guide to help SMEs put in place an effective, manageable process to measure customer acquisition efficiency. We’ll start by looking at…
At the most basic level I guess we can all agree that the efficiency of the customer acquisition process is determined by three factors: the number of customers won, the time it takes to win them and the total costs of the process. Furthermore, it is probably true to say that most business owners and senior managers could ‘guesstimate’ these figures - but the data doesn't tell us much, does it?
It doesn't provide insights into the overall effectiveness of the process; it doesn't help identify problem areas or where there might be scope for improvement; and it doesn't allow managers to make informed decisions on future investment or initiatives - even assuming that our ‘guesstimates’ are anything like right!
We need to drop down a level and look at the efficiency of each stage of the process. Let me give you a simple example from my own experience to illustrate the point.
When I started my mentoring business I, like all start-ups, was faced with the question of how to find my customers. Over time I developed a basic four-step process -
I was able to track the numbers very easily and identify where the weak points were. So, for example, there was originally no stage 4. The prospective client was sent the assessment report with the proposal and I followed up by phone and email a few days later but the client found it all too easy to put off making the final purchasing decision!
Introducing the feedback meeting as stage 4 solved the problem. If the meeting went ahead I could more or less guarantee that the client was committed; if they cancelled I knew they weren’t.
The key point here was that, by breaking the overall process into steps, monitoring efficiency and costs became much more straightforward. If the overall conversion rate started to drop, it was also very easy to identify where the problem was and to do something about it.
OK, I accept that this is a very simple example but the principle applies to all customer acquisition processes.
The overall approach is very simple -
Once the approach is in place ‘guesstimating’ will be a thing of the past. You will be able to manage, optimise and scale your customer acquisition process with confidence.
Here at Priszm, we take metrics and measurement extremely seriously. For us, any business that doesn’t have genuine knowledge of these figures is operating in the dark and is, potentially, in a very dangerous position. The subject is a core element of our assessment and audit methods as well as our lean and agile processes.